Lillian Rearden might be the most boring character in whole book. She really almost seems pointless. First off, she's a totally ineffectual villain – she's totally inept at getting Hank:
The punishment she had wanted to inflict on him was the torture of shame; what she had inflicted was the torture of boredom. (22.214.171.124)
Worst. Villain. Ever. So what on earth is Lillian's purpose here? Besides boring everyone to death that is. Well, she's mainly important in terms of Hank's characterization. She symbolizes his moral struggle, and she is also set up as a contrast to Dagny.
What's fascinating, though, is that Hank doesn't see the contrast at first. He mistakes Lillian for the type of person Dagny is. How does he make such an error? Let's check it out:
It was Lillian's austerity that attracted him – the conflict between her austerity and her behavior.... He found himself held by the spectacle of a woman who was obviously pursuing him but with obvious reluctance..... It was the difficulty of the conquest that made him want Lillian. (126.96.36.199-14)
Hank seems to associate austerity – a cool, emotionless attitude – with purity. And Hank, who loves a challenge, wants to "conquer" that purity. Intriguingly, Hank views Dagny in the same terms as he once did Lillian early in their acquaintance. He sees her as noble and "pure" and is ashamed of his sexual attraction to her. In the end, though, Hank learns that Lillian is a cold and cruel person, while Dagny is noble. Hank also learns to view sex as something noble in his relationship with Dagny.
Overall, though, Lillian doesn't really qualify as a foil to Dagny. Instead, the two women are set up on totally opposite sides of the spectrum, showing the contrast between a woman firmly rooted in the looters' regime and one firmly committed to Galt's value system. Here's a scene where Lillian makes a failed attempt to humiliate Dagny.
"Miss Taggart," she said, "I am not your equal in philosophical altitude. I am only an average wife. Please give me that bracelet – if you do not wish me to think what I might think and what you wouldn't want me to name."
"Mrs. Rearden, is this the manner and place in which you choose to suggest that I am sleeping with your husband?"
"Certainly not!" The cry was immediate; it had a sound of panic and the quality of an automatic reflex, like the jerk of withdrawal of a pickpocket's hand caught in action. (188.8.131.52-6)
Aside from getting owned here, Lillian is also interestingly compared to a "pickpocket." She tries to act like a queen of manipulation, but she's really sort of a petty thief, a "looter of the spirit" who can never quite manage to one-up people with Galt's values. This scene also reveals Lillian's view of sex as something shameful and animalistic, which is an attitude that further contrasts her with Dagny, who unites rather than debases her mind and body.
Of course, Lillian did have a decent run with Hank over the years. She made him feel guilty and deny his own desires. But the instant Hank withdrew his "sanction," so to speak, Lillian crumbled like a house of cards. There's something very hollow about Lillian Rearden.
"I've been unfaithful to you! Don't you hear me, you stainless Puritan? I've slept with James Taggart, you incorruptible hero! Don't you hear me?...Don't you hear me?...Don't you . . .?"
He was looking at her as he would have looked if a strange woman had approached him on the street with a personal confession – a look like the equivalent of the words: Why tell it to me?
Her voice trailed off. He had not known what the destruction of a person would be like; but he knew that he was seeing the destruction of Lillian. He saw it in the collapse of her face. . . . (184.108.40.206-180)
This scene helps to reveal the hollow nature of the looters as a whole, and it also highlights Lillian's connection with James Taggart. Lillian is sort of the female version of James. Both thrive on manipulating others and on using their code of "morals" to cause others pain. Both share an understanding – they speak a similarly evasive language and seem to view each other as kindred spirits. Of course, being kindred spirits, they often display contempt for one another, as their awkward and mean-spirited sex scene reveals (220.127.116.11-17). In the end, James and Lillian suffer very similar fates, having failed to achieve the sort of victories they wanted.