I just tried the special ability of my brand new Scepter of Domination on Magnar.
It worked. Now I'm controlling the enemy's Sovereign.
Reloading a save game after dominating him brings two massive problems:
1. my Sovereign does not exist anymore. I'm playing with my kingdom, but with Magnar as Sovereign.
2. Magnar's Empire has 0 Faction Power, but is not removed from game.