They won't reveal him in ep3... at least, not totally. The character itself is too much of an enigma, if they just blurted out exactly who he is and what he does, it'll ruin the years they spent building up the character and dropping subtle, unhelpful hints as to what impact he has on the world.
Also, he can't be a hallucination (as mentioned above). Not only does he interact with other people, but he interacts with reality (although we're not told how). He also can't be related to the vortigaunts in any beneficial way, since he has to wait for them to be distracted to communicate with Gordon (and there's that whole thing where they prevent him from interfering in ep1 I think it was).
He has (seemingly) the ability to move between dimensions at will, or using some kind of device. He has the ability to move (teleport?) also at will (as evidenced by the few appearances you see of him during the hl games). He can manipulate matter (or so I assume, since he can 'monitor' you through a tv screen, and appear on it).
There's simply too many unknown details, and too many possible interpretations to make this anything more than a fun brain exercise.