Spiders/Recluses are not insects.
Well, the insectoid description is quite a bit broader than 'is an insect'.
Congrats on the Passive contest!
Now about the card: it seems a bit UP atm. I'd make both upped and unupped cost 2
, and make the delay 2 turns instead of 3. Sure, it would stack well with a firefly queen, but that's that.
Another thing: you don't have to make it invulnerable to prevent fractal problems. Fractal doesn't copy a creature, it copies a card identity. You could either decide that playing a chrysalis from your hand does not produce a dragon (the dragon part is already stated on the metamorph card so doesn't have to go on the chrysalis) OR you can just give Chrysalis | Cocoon a (high) cost, such as 8(or so?) random quanta (which will only have to be payed when a chrysalis is fractalled or reverse timed). Either way, this will prevent the issue of free dragons.
If you choose the first option, you could make a stand-alone chrysalis/cocoon produce a firefly instead of a dragon if played from your hand... (or produce nothing at all). If you choose the second option, then the cocoon/chrysalis might actually be a fun stand-alone card: it's cheaper than a dragon, but it has a few turns delay.
PS If it were me I'd flip the unupped/upped names.
Ever since I've played Starcraft (1) and watched Cocoon (the movie), the word Chrysalis has sounded much more epic to me than the word Cocoon. =D