Well, the rest of this post is speculative since we don’t have the information to say exactly. And it’s likely that Arc won’t tell either.
But here's what I think happens:
While I do still believe the cutoff at 3 was harsh, it just makes sense mechanically. If you really wanted to keep Lily, you would’ve gotten her to 4 hearts.
But we’re led to believe Lily abandoned the bar if you don’t have her at 4 hearts.
It is possible that her dad’s tech that made the bar teleport is still there.
The eldritch were trying to muck around with it but failed and the bar didn’t get destroyed, but teleported to some unknown location.
In the end, it doesn’t really matter because I’m almost willing to bet we won’t see Lily again in this timeline.
In summary: Don’t be a dingus and get the characters to 4 hearts.