There’s 1000 possible explanations but “These are normal people in the real world who coincidentally look just like hosts” is not one of them.
This isn’t Picard, actors don’t get reused just for the f*** of it.
And actually having a cut on her arm means they are not hallucinations.
And remember Bernard ended last season going into the simulation and did not appear yet.
I refer you to this interview with the showrunner about re-casting Wood for the entirely new character - it sounds like basically "We liked the actress so why not". I don't buy it completely but sure as hell Dolores seems to be really dead and Wood's character is probably still connected to the previous 3 seasons somehow.
As season starters go this was par for the course - i am completely confused with a million questions and none of them were answered. Curious how this continues.