OK, I am now reading through the rules a second time, trying to understand the nuances before playing (hopefully) next week. I just assumed that allied (previously neutral) units could attack an enemy territory, but now upon further reading, I'm not so sure.
Page 19 under allied units:
"If these allied units are ever in an area not controlled by the player, then they stop being allied to him. The units are then considered normal neutral units that may ally with or be attacked by any player."
This states that the allied units only stay allied while in a FRIENDLY territory, and by defination any attacks you launch are into neutral or enemy territory. Also using the word EVER does not leave wiggle room to resolve this at the end of a phase or something. Furthermore, the example of combat on pages 23 and 24 does involve allied units, but only for the defending troops (and thus the territory is freindly to the defenders).
It would make life very complicated if an attacker brought in allied troops into a battle, if in fact they revert to neutral since they are not part in a friendly territory. How would the combat work? Letter of the law makes it sound like they would actually be controlled by the player to the left of the attacker, potentially making 3 players involved in one combat...
Is it correct (and intended) that allied units are only able to participate in defending territory, and not ever participate in taking new territory?
It seems odd to me that a dragon can't attack, only defend.
Just cusious what the community's (and designer's?) read on this is.
PS My ruling would be that this is not as intended, and in teh case of a battle, the determination of "freindly territory" is made after the battle is resolved. That is not what is written in the rules as far as I can see though.