Why? They have another duchy, which contains another city. I was under the understanding that the capital changing allegiance was an allowed move.
Indeed. The conclusion of the Solaria magistrates case was
The Magistrates decline to rule on the question of realm mergers generally and the secession of capital duchies at this time, due to ongoing discussions among the Magistrates, Dev Team, and Tom.
The bug was about the last duchy switching allegiance, and that was what the rule the case was pinned on.
You posted yourself then:
If you are declaring now that #1 is to be disallowed, that is a major policy change.
Not only will it require significant code changes, but it should absolutely not be used as a reason to punish Solari for what he did, because for years now, it has been both possible and legal to change the allegiance of the capital duchy. Ex post facto laws are a bad thing, whatever your original ideas might have been.
If discussion among the Devs resulted in capital changing allegiance now being disallowed, it should announced.