In certain circumstances, I don't think it's a bad idea. It has happened before, when Xinhai was renamed to Morek Empire.
However, I do think there needs to be some pretty strict limitations on it. the current situation in Iashalur is interesting. If Leopold can keep the throne, then it may be worthy of a name change to Niselur, which was founded by his relative years ago. That is far from certain so far, so it would deserve some kind of waiting period. But then what happens if Turin leads a campaign to take it back? Can he change the name back to Iashalur? Will we get into ping-ponging name changes?
Also, I think there should be some slight variation to the new name, and not just a duplication of the old name.
