Quantum illumination (QI) is an entanglement-enhanced sensing system whose performance advantage over a comparable classical system survives its usage in an entanglement-breaking scenario plagued by loss and noise. In particular, QI's error-probability exponent for discriminating between equally-likely hypotheses of target absence or presence is 6 dB higher than that of the optimum classical system using the same transmitted power. This performance advantage, however, presumes that the target return, when present, has known amplitude and phase, a situation that seldom occurs in lidar applications. At lidar wavelengths, most target surfaces are sufficiently rough that their returns are speckled, i.e., they have Rayleigh-distributed amplitudes and uniformly-distributed phases. QI's optical parametric amplifier receiver-which affords a 3 dB better-than-classical errorprobability exponent for a return with known amplitude and phase-fails to offer any performance gain for Rayleigh-fading targets. We show that the sum-frequency generation receiver [Phys. Rev. Lett. 118, 040801 (2017)]-whose error-probability exponent for a nonfading target achieves QI's full 6 dB advantage over optimum classical operation-outperforms the classical system for Rayleighfading targets. In this case, QI's advantage is subexponential: its error probability is lower than the classical system's by a factor of 1/ ln(MκNS/NB), when MκNS/NB 1, with M 1 being the QI transmitter's time-bandwidth product, NS 1 its brightness,κ the target return's average intensity, and NB the background light's brightness.Quantum illumination (QI) [1-9] uses entanglement to outperform the optimum classical-illumination (CI) system for detecting the presence of a weakly-reflecting target that is embedded in a very noisy background, despite that environment's destroying the initial entanglement [10]. With optimum quantum reception, QI's error-probability exponent-set by the quantum Chernoff bound (QCB) [13]-is 6 dB higher [4] than that of the optimum CI system, i.e., a coherent-state transmitter and a homodyne receiver. Until recently, the sole structured receiver for QI that outperformed CI-Guha and Erkmen's optical parametric amplifier (OPA) receiver [6]-offered only a 3 dB increase in errorprobability exponent. In Ref.[14], we showed that the sum-frequency generation (SFG) receiver's errorprobability exponent reached QI's QCB. Moreover, augmenting that receiver with feed-forward (FF) operations yielded the FF-SFG receiver [14], whose performance, for a low-brightness transmitter, matched QI's Helstrom limit for both the target-detection error probability and the Neyman-Pearson criterion's receiver operating characteristic (ROC) [15].Prior QI performance analyses [4,6,14,15] have all assumed that the target return has known amplitude and phase, something that seldom occurs in lidar applications. At lidar wavelengths, most target surfaces are sufficiently rough that their returns are speckled, i.e., they have Rayleigh-distributed amplitudes and uniformly-distributed...