Very true. That might be part of it. Of course, that wasn't a matter of "ruler dies, heir takes over side", it was more like "entire side gets wiped out, unit in the field (that contained a heir) goes barbarian." I'm not sure if it's because of the heir or not.
It could also have been ruler dies -> Jillian becomes Queen -> City Falls -> Jillian become barbarian as she lost all of her cities.
I don't think we know what happens to units in the field at the time, nor do we know what happens to units in the field if their home side gets wiped out; I don't think we've seen any examples of that other then Jillian.
They disband according to Parson in one of the klogs.
Well, there certainly are disadvantages to having uncroaked units instead of living units, mostly that they decay over time. It may be that the powerful artifact she has just removes all those disadvantages by creating decrypted units instead. We haven't seen any sign that from any practical point of view decrypted units have ANY disadvantages over living units, and they seem to have at least two advantages (Zero upkeep, and I would guess a very, very high loyalty.)
The loyalty is probably to the wielder and not to the side. The disadvantage could be that it increases the chances of the side splitting and also represents a single point of failure.
Perhaps, as Wanda is worshipped by more units, the lower her (already very low) loyalty stat is adjusted.