That's interesting. Not to say encouraging.

Just for clarification, I realise the AI factions only move after you've made your moves, so did you actually order a sally-out-from-castle type attack and the Byz just happened to join in or did you leave them sat in the castle and the Byz moved in of their own accord? If the latter, I'd be interested to know what the pre-battle screen said, as well as how you were allowed to participate in the battle when you hadn't actually ordered a sally-forth.

Technically, with you retreated to the castle, the province was owned by the rebels on that turn. This is the only way the Byz were able to strike without turning your alliance into a war against them.