Idk if she knew Lily was the real one. I think Lily's mom fooled everyone. I'd need chapter 52 for a better explanation, but Swan was weak since birth and she was lying next to Lily. The pendant therefore helped save Swan's life and at the same time applied a power that changed Swan's looks. Enough power to last 10 years. The reason why Swan died is because she reached that limit, and if her corpse wouldn’t decay I'm guessing her face would return to normal again.
The fallen noble (ex-director of the orphanage) recognized the crest on thr pendant and since Swan looked a lot like the father, assumed the pendant was Swan's. Then in turn Swan overheard them and also thought she was the daugther.
What I just don’t get is where tf is that picture coming from?
But the lady said the amount of power was worth 10 years. So around the time Swan died. Why didn’t the portrait change at that time too then? It's been 10 years since Swan died. Unless they meant it’d take 10 years after Swan's death. But the fact remains that this portrait was drawn by someone seeing a black haired girl. There was no magic involved in the drawing process, so it's a huge plot flaw anyway because it makes no sense that the hand drawn portrait would change... anyway I think it's just rushed so bad that it's full of plot holes
I took it as her powers could revert it the painting somehow passed off the person not restore the actual painting. That’s why she said it could change like their age being different. Since swan wasn’t the actual daughter when she used her powers to revert the painting it was of what sawn would have looked like with out the duchesses life force running through her.

But wtf, after reading the recent chap (51) man that was a fucked up move swan. Like wym u know she’s the real daughter yet pulled that stunt on her? Thought u was real, anyway it started as strong yet went awry, truly unfortunate.