This case has a precedent.
Tuchanon V, reduced to the city of Isadril through war with Perdan, "surrendered" to Caligus. The rulers of Tuchanon and Caligus conspired together to give the city of Isadril, the last city and region of the realm, to Caligus. In a maneuver timed to coincide with the refit of Perdan, Tuchanon V disbanded all the militia in the city, and all the nobles moved out. Caligus declared war and simultaneously moved in to quickly TO the city. This was specifically done to prevent Perdan from defeating the defenders and CTOing to form a new realm in Isadril. The duke of the city was reappointed by Caligus, and I believe one of Tuchanon's council members became a Caligus council member, too. All the Tuchanon nobles stayed on as Caligus nobles.
The maneuver was reported to the Titans. The decision was reached that the maneuver was not an illegal realm merger. Tuchanon had no hope of living or expanding they were facing a superior enemy, and were on the road to destruction. IIRC, the question was asked on the old DList, and the answer was something like "Well, what do you expect them to do? You want us to make them fight it out to the end? The realm was dead. Move on."
The realm merger rule, as someone already mentioned, is intended to prevent two healthy, functional, and viable realms, from joining together *in equality* to create a realm that is the merging and fusion of the two. I.e. Asylon and FR cannot join together to form a single big ream for the purpose of attacking Astrum. It is not intended to force a realm to fight an obviously losing war to the bitter inevitable end. Nor is it intended to reserve the last few regions of the defeated realm for the conquerors. Nor is it intended to limit the choices of the nobles who may be ruling regions in that defeated realm.
The realm merger rule was specifically intended to disallow two viable, comparable, functional realms from willingly, and voluntarily, joining forces, subsuming themselves into a single greater realm consisting of the territories and nobilities of the two component realms.
This Terran/D'Haran "merger" fits neither the letter of the law, nor the spirit of the law. Period.
Edit: derp... wrong word...
I would note that Terran's situation is not hopeless.
But beyond that, I'm happy to overturn Titan precedent if the Titans were obviously wrong: and the ruling you quote, as you've described it, seems obviously wrong to me. No realm mergers is a very, very simple rule. And asking the Magistrates to come up with a qualification for what makes two realms "equal" is a crazy big can of worms. How equal do they have to be? How friendly must they be?
