Because he's such a sensitive person by nature, Mara is constantly aware of what other people think of him. To the religion that knows him, he's thought of as a pest, and this deeply upsets him. Thus, he's trying to prove that he can get one up over the Buddha... but he really doesn't have the necessary malice to be more than a bother.

'Minor hallucinations' would mean things like making you see a rainbow or believe you're on fire; things that are basic and sensory. Mara can't make you hallucinate your worst fear because he has no idea what that might be.