When fighting a battle within my own influence zone I got the message that I was eliminated when my sovreign was killed during the battle. After a bit of testing this seems to be happening only after I cast a spell during the tactical combat. I tested this by first getting my king killed without using a spell, I then got the message that he escaped using 245 mana, then I started a game casting a spel during combat but making sure I had over 245 mana left but I still got the message that I was eliminated.
debugg err
http://dl.dropbox.com/u/10491696/debug.err
http://dl.dropbox.com/u/10491696/debug2.err
http://dl.dropbox.com/u/10491696/QuickSave%20Thelgar%202.EleSav

The situation before the battle, notice that it's well within my influence sphere

Start of the battle

The battle without casting

My King is killed, noticed how I need 243 mana to escape

Reloaded the game and started the battle again and casted a spel, notice how after casting the spell I still got 422 mana left

My king gets killed, still more then 245 mana left

Elimination started anyway

The End.