I don't think she swapped the holy sword, it was just stuck in dagger form and wouldn't turn into a longsword like the legend said it was. So Cedric was accused of treason.
It changed into a jewel for Iris, but when it came time to use it, it still stayed in dagger form in the vault.
But my speculation is that she may have put a dark spell on it or something to prevent it from changing into a longsword...but like I said, pure speculation. But why won't it properly change back to it's longsword form, especially if it changes due to Iris's thoughts and needs. Her first thought was that it should be a longsword and how to fix it, but nothing happened. Her 2nd thought was to conceal it, and it did change to a jewel for easy concealment. So something is definitely wrong with the sword. That may be what the Veiled Lady did.
Who's that veiled lady? She altered the ending by swapping the holy sword, does that mean she's also reincarnated?