Our Spitzer IRS observation of the infrared companion Glass Ib revealed fine-structure emission with high ionization ([Ne iii]/[Ne ii] = 2.1 and [S iv]/[S iii] = 0.6) that indicates that the gas is likely illuminated by hard radiation. While models suggest that extreme-ultraviolet radiation could be present in T Tauri stars, this is the first detection of [S iv] and such a high [Ne iii]/[Ne ii] ratio in a young star. We also find that Glass Ib displays the molecules HCN, CO 2 , and H 2 O in emission. Here we investigate the Glass I binary system and consider possible mechanisms that may have caused the high ionization, whether from an outflow or disk irradiation. We also model the spectral energy distributions of Glass Ia and Ib to test if the system is a young member of the Chameleon I star-forming region, and we consider other possible classifications for the system. We find that Glass Ib is highly variable, showing changes in continuum strength and emission features at optical, near-infrared, and mid-infrared wavelengths. The optical light curve indicates that a central stellar component in Glass Ib became entirely visible for 2.5 years beginning in mid-2002 and possibly displayed periodic variability with repeated, short-period dimming during that time. As the fine-structure emission was not detected in observations before or after our Spitzer IRS observation, we explore whether the variable nature of Glass Ib is related to the gas being highly ionized, possibly due to variable accretion or an X-ray flare.