I think it can be wrong. It would seem to me that a person does this because they don't trust that they are acceptable just as they are. One of the benefits of true friendship, in my opinion, is that a person enjoys an increasing sense of being accepted just as they are. So when you lure a person into displaying these tendencies to lie, I think you are stimulating them to tune in to their anxieties, which are what this behavior is rooted in. A true friend, I think, would want to encourage them to feel more secure about dropping this mask that they hide behind.

While I don't doubt that you're friend is a good person and that the lying behavior is probably fairly harmless, this behavior is most likely crowding out healthier ways that she could bolster her self-esteem. While she is living in these fantasies, she is probably neglecting developing her real capacities to be successful and to come to terms with negative things about, say, her family that she need not feel she has to disguise. She's keeping herself in a childish state of mind, which might seem kind of cute to you, but that's blocking her development into a stronger, more mature person who can better cope with life's challenges.