I keep editing it to try and make it clearer and am probably doing the opposite, but I did notice one flaw going back and checking Xinhuan's post.

From his last example mostly... If A hits B three times, how many DR-free retals should B get? That would still be a tricky one. I would say just one DR-free retal, once the status is not A-0 anymore, the DR-free retal flag goes down. This may seem exploitable. A country in heavy DR can hit a guy multiple times for lots of land, and the victim can only get his land back once, true. But doing more than one hit opens up GDI, so even if the victim can't get his land back, they have a few other avenues of recourse they can pursue to see that justice is served. :)

So, I still think the way I described would be a solution...