Warning this is a bit of a mess
I believe holly berry is a metaphor for creation. The Lady/Lyra uses it to bring back Lanre in the form of Old Holly the warrior. For further exploration, consult this post, though it wasn't written with this in mind.
Holly is what the Sithe wear when they ride out hunting skin dancers, so we presume it has some protective powers
Bast tells us the Sithe guard the Cthaeh, and treat anyone who comes in contact with it like a disease they need to burn out of this world. Kvothe casual walked up to it however, so something is amiss.I like to think they allowed it. Furthermore and that they are shooting down the butterflies. Butterflies pollinate, which help plants reproduce, by moving the male bits to the female bits on another plant. So is kvothe a pollinature of another sort? Felurian doesn't think he is bitten, but she doesn't look to hard. And she is a bit of a twilight flower, if you will excuse the expression, herself.
Holly is also features predominantly in How Old Holly came to be OH:
Old Holly bent his boughs again, and brought a spear, its wood of living green. Its blade as bright as berry blood. This he drove into...
And has implications for our tired Inn Keeper. WMF:2:423
The innkeeper ’s fingers fumbled clumsily, snapping the holly branch and jabbing a thorn deep into the fleshy part of his thumb. The red-haired man didn’t flinch or curse, just scowled angrily down at his hand as a bead of blood welled up, bright as a berry.
