Well, here's how I see Brainiac happening: He starts off as a deep space probe sent out by the empire of Colu. Colu wanted to perfect their society, and so they pacified it. Essentially, they lobotomized their entire population and implanted computerized parts into their brains so they could be controlled. To increase their technology and overall knowledge and to spread order to the rest of the universe, they sent out several probes to carry out those tasks. Eventually, the people of Colu rebelled and regained their free will (although they retained their techno/organic brains, resulting in their vast inteligence), and destroyed all of the deep space probes. Except one. That probe, after monitoring events on Earth and learning of the Kryptonian technology there, came to our planet. It was found by a carnival psychic and magician named Milton Fine. The probe killed fine and latched onto his body, taking it as it's own. It then began using Fine's stage name, Brainiac, to identify itself.
Brainiac vastly enhanced Fine's meager psychic abilities, giving it vast telekenisis and telepathy and the ability to generate massive energy blasts. Way I see it, through the film, Brainiac slowly converts Fine's body into that of a techno/organic life form throughout the film, causing it's skin to turn green, it's eyes to look more mechanical, and wires to be visible underneath it's skin. More obvious electronic parts out be sticking out of it's skin, primairily three red dots on it's forehead and certain tools on it's forarms.