It becomes a copy of the next spell you cast, in the bar so that you can use it again. That means it's intended to be used in order to ignore recharge times. (No reason to copy something like Flare)
And no, 2 enchantments or hexes of the same type on the same target don't stack. Conjure Phantasm you could already cast twice rapidly enough for overlap, which should already have demonstrated that.
What can you do with it?
Say you have a great spell, perhaps an Elite, and it recharges every 20+ seconds. Ok, so you arcane echo it, and now you can use it twice as often. You could set Migraine on 2 enemy casters, double the annoyance out of your spell. Or you could cast 2 chain lightnings one after the other. Or 2 meteor showers. Or a second Spell Breaker immediately after the first runs out. Whatever.
Echo is the same thing, except it's cheaper, and can copy any SKILL, not spell(Elite though). Skill includes spells, so that means anything at all you use after using echo (although, I'm not sure exactly where stances stand in this matter...), it copies, and you now have a second one at your disposal.
So now you have some nice spell, such as backfire. You can cast:
Arcane Echo
Backfire
Echo
Backfire (Arcane Echo Copy)
Backfire (Echo Copy)
And place Backfire on 3 people. (Actually, the first cast will most likely expire by the time you're done, not to mention energy issues likely to arise).
Or you could:
Arcane Echo
Echo
And have 2 echo's instead of just 1, eliminating the 'spell only' limitation of arcane echo.
Another interesting tidbit is that illusion only affects the time you have to use the skill you want to copy. The initial time is generally already enough, so you need very few to no illusion to make use of the above skills.
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