A specially-designed sounding rocket experiment with a bare, conducting tether was recently suggested to test an idea that tether-produced energetic-electron beams can be used for remote sensing the neutral density in the E region. This letter contains the theoretical analysis of collisionless beam-plasma interactions (BPI) that complement direct impact of the energetic electrons with neutral particles. Collisionless effects are shown to play a significant and even major role in tether-induced aurora (TA). In the F region, BPI lead to appreciable green-line (557.7 nm) emissions at ~200 km. Farther downward, BPI develop inside a local minimum in the plasma density between the E and F regions, the so-called valley. Here a thin layer of a strongly-elevated electron temperature and airglow is predicted. Neutralizing electric currents carried by ionospheric electrons can become unstable in the low-density valley. As a result, developing plasma waves inhibit the currents. In the extreme case, the beam might be locked (a 'virtual cathode'). In addition to optical observations, these effects can also be observed by radio frequency methods.