What does it mean when you prevent a unit from attacking?
Of course you can kill it. That's the point of the Illusionist. The ability doesn't say "The enemy cannot combat", just that you can skip its attack phase.

I like to see it as 


  "Your fellow illusionist cast a powerful spell that makes the monster
  believe you are elsewhere. The monster tries to attack you, but
  instead he attacks an empty space, making his attack so worthless you
  don't even need to block. Now you can strike back and put him out of his misery!"