Well, I'm glad you're doing great.
I did similar tests about 10 or 15 years ago at MGE. I also used non-moveable NON settlers. In MGE, this trick definitely didn't work. From about the 200th round (mid-18th century), destroyed nations can no longer be reborn. Therefore, with the capture of the last city, the nation inevitably disappeared from the game. No matter how many NON units of any class she had. They just automatically disappeared after the fall of the last city.
Probably TOTPP fixed something in this game mechanic, since everything works fine for you.