How does the statement imply Michael (a male's name) is certainly not the greatest actor? I read it as implying Julianne (a female's name) was not by saying "she was overshadowed."

And why wouldn't it be an injustice to the other actors, who are better than her, that she was thinking Michael was the best? Why also was it not placing an overemphasis on his talents?

It won't be injustice because she is not giving him any reward in lieu of the other actors. It also won't be an overemphasis since she is not communicating her thought to others - emphasis is only given when you are writing or speaking to others to make a point.

The question is deliberately misleading by choosing a name normally associated with males and associating it with a female while remaining ambiguous about who it is referring to.

Hello Spencer. I am pretty sure there was not any intention to mislead. Julianne is a common female name, e.g., celebrities Julianne Hough and Julianne Moore.

I think that what is going on here is that Michael and Julianne are, indeed, separate people; the first clause is purely contextual, and somewhat confusing. The prompt works just as well with just " Julianne recognized that she was indulging in hyperbole when she wondered..." Folks are just confused by assuming that her knowledge that she is not the greatest has to directly inform her awareness of the hyperbole at hand in her admiration of Michael.