FIRST OFF, i'm not a lawyer... i'm just waiting for a response to my own question, and came across yours. Thought I might be able to give you a bit of insight b/c my husband is also unlawful, although, he does have a VALID work permit(EAD).. using a fake work permit is a serious offense... They may decline your application just on that alone.

The two options we had were: #1)take our chances and apply for AOS or #2)leave without applying and start over somewhere else. Bottom line, if we apply and get approved, WONDERFUL! If we apply and get denied, it would mean a MUCH MUCH MUCH harder life, probably in a country where we didn't know the language... and is without clean water.. but it would not be the end of the world. God has a plan for everyone. If you make a decision and go forward with it FULL heartedly, the end result may not be exactly to what you initally WANTED, but it will be as it should be.

Good luck!