otrl021 - I have a solorensis fairy wrasse that has the same behavior; swimming across the top of the water column taking gulps of air.
My solorensis fairy wrasse did not previously behave like this. It was only until I introduced a yellow streak fairy wrasse (Cirrhilabrus luteovittatus). After a few weeks, my C.luteovittatus was quite at home in my display and would display aggression towards my C.solorensis (the C.luteovittatus was the largest fish in my display). I let the chasing go on for 2-3 weeks and observed my C.solorensis losing its resistance to the harassment, beginning to display the odd behavior.
Well, I gave my C.luteovittatus away and for about 3 weeks so far, my C.solorensis continues to display this odd behavior. Plus, he is now frightened of the remaining three (smaller) fish I have in my display.
In contrast to your situation, my C.solorensis is surviving and continues to eat voraciously, so I just hope he recovers from the traumatic event he endured.
Since you said your exquisite fairy wrasse was the ruler of the tank, keep a close eye for ICH. ICH has a life cycle during which some stages of the parasite cannot be readily observed. The only advice I can give is to continue to encourage your exquisite fairy wrasse to eat.