At the moment I am home sick and being unable to rest, I passed the time by rereading the rulebooks for TI3 and both of it's expansions. As I'm reading a random page in the Shattered Empire booklet, I come a cross a small rule update on retreating (now called Tactical Retreating) that I must have missed.
If I realized this rule before, my games would have gone differently I can imagine! Doh!