Keep the scale of the TW game in mind, 1 turn = six months (at least for RTW, I´m not sure what´s up with the new time model for MTW 2), one campmap square = ??? square miles.It happened ,but the army that was protecting the town left days before the enemy could arrive not when the enemy was 20 miles close.
As for your points:
1) yes, your faction leader can escape, but you lose the city. There´s a limit how often you can retreat, obviously. I´ll not mention that it worked pretty well in MTW I.
2) I don´t see why not. Either the AI is weak, then they´ll retreat and abandon the city. Or they´ll give battle when they´re strng enough and, when they´re defeated they´ll be entrapped in the city. Finally, the AI decides it´s strong enough to hold out in a siege, but not to give battle, then they´ll retreat into the city and wait for external reinforcements. Again, I won´t mention that it worked well with MTW I.
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