Thanks for going through and confirming exactly what happens during a sally.

Here's a situation I had once:

I was sieging a city, and the enemy sallied forth. Normally I'm able to kick butt and take the city like I normally do even though the enemy gets the first strike. Well, I was outnumbered and it took the whole entire timer to fight my way into the city. I took the walls to keep the AI from reinforcing the square from troops outside the gates. I ran out of time right as I had about two minutes left to hold the square . End result was a draw, so no troops got healed, but I still was able to take the city--I assume I took it either because my troops were inside the walls, holding the square, or defeated more foes.

It's nice to know I can use this to my advantage on the defending end though.