Uh, never tried to play R'lyeh ? Illithid Mind BLast works exactly like Paralyze, but ALL Illithid have it !
As for your Q :
1/ Dunno, it should have protected them.. Maybe the caster had some "focusing" items ?
2/ For Illithids I get the same results with "Fire Large Creatures", but indeed you can't specify spell targets... weird ... If there is a way to script spells to target large creatures I'd be glad to kow it !
Well, are you sure your foe did CAST paralyze, and wasn't Mind BLasting ?