I have the Lily 2, initially the smell coming out of the box was seriously over whelming. I couldn't stand it. After a while the smell died down quite a bit. I've had it around three weeks now, and honestly I can barely smell anything, I have to practically stuff it in my nose to get a slight whiff of the Lavender.
Also, when I received my Lily I contacted Lelo asking about the smell in regards to skin irritation. They said "Steve Thomson, Director of Marketing at LELO said: “Our goals with LILY™ 2 are to give customers a chance to stimulate multiple senses at once, enhancing the moment and mood. The LILY™ 2 is not designed to alter the taste or smell of a woman, but rather offer a new and exciting way to tailor your own form of pleasure. The manufacturing process of LILY™ 2 ensures the fragrance does not come in contact with the body. Instead, it's sealed within the product itself, bonded at the very start of the process. That way LILY™ 2 not only delivers powerful vibrations, but the fragrance enhances the ambience as a whole.”
That is the actual quote from the email - they advised that you shouldn't have a reaction from it.