It does seem wrong that Dain spawns in this manner - but partly makes sense, you fail the War you will need to speak to him about new declarations etc
This server obviously doesnt let you speak with him very long but the original devs may have thought more about the quest than the actual act of downing city leaders for heads.
I know there is another thread specific to this issue - what was the resolution - Dain spawning on failed Ring War - Is it classic ? I remember reading that it would be difficult for Nilbog to separate out a specific mob from a repoping zone mechanic but I also have not read that thread in a while. It doesnt make much sense to try to build a policy around something that will get changed tho.
Here is the thread:
http://www.project1999.com/forums/sh...highlight=Dain