The name 'Ailey Hill' was previously "Elueshou" (or -howe) - that is, Elf Barrow.* It doesn't sound like a very Christian place to be burying people. Perhaps that's why the church took it over.
Other stories are connected with the site:
There remains.. a monument of some dreadful carnage that occurred here awhile after [the Danes]. This is a large conical tumulus at the east side of the town, about a bow shot from the cathedral, composed throughout of sand, gravel, and human bones, mingled in that indiscriminate manner that would occur when the victims of the battle-field were hastily collected in one vast mound, that served alike as their memorial and their tomb. The teeth and bones of horses, too, have been found in quantities within a short distance around its base.
This singular and mysterious object, which was called in Leland's time Ilshow, but now Ailey Hill, measures about three hundred yards in circumference at its base, and about seventy in sloping height.
Etymologists have connected its name with a presumption that Ella, the Northumbrian king, fought, or was subsequently slain here in 867, and that he, or those who fell with him, were deposited in a "how" or hill that was designated by his name.
(Walbran immediately denies any belief in this ridiculous idea.)
From p 6 of Walbran's book, and p112 of Semple's article.
Now here's a strange thing. Maybe this mound is a natural mound. Though unnatural mounds are hardly unheard of in the vicinity. The Magic database is not giving anything away, though the site is listed as a scheduled monument.
It's quite common for barrows to have been reused by later peoples - here burials were found from the 6th to 9th centuries AD (first maybe locals, later maybe from a monastic community). Get this - the minster of Ripon (Saint Wilfrid's church) "appears to be aligned on Ailey Hill," which for whatever reason, along with the burials, tends to suggest the church was trying to assimilate this mound and what it apparently represented.
Info from the article:
A Fear of the Past: The Place of the Prehistoric Burial Mound in the Ideology of Middle and Later Anglo-Saxon England
World Archaeology, Vol. 30, No. 1, The Past in the Past: The Reuse of Ancient Monuments. (Jun., 1998), pp. 109-126.