I myself have wondered about this, OP, but I'm afraid I have to agree with both @Boblawblah and @Abits. As much as I would LOVE for SH to be a Selunite (given that I want my all-good party), if this is how it happens then that would seriously alienate me.
Don't get me wrong, the Selunite angle is really only something I added because of scuttlebutt on the forums, and isn't really necessary. I was thinking more along the lines of @JandK with the return of SH memories making her a much more cruel person, possibly one conflicted by her experience in the party having to re-reckon with a past persona.