Is this only a visual bug? Or do the units still 'defend TanTaKreett when you attack it?
It is not a visual bug at all. The units on top of the city are simply frozen with no ability to move.
View of units froze on top of the city with my garrison in the city. (Notice the date at top left vs the date on my first screenshot. Several turns after I cast the Broken Loyalties Spell):
[/URL]
Uploaded with [URL=http://imageshack.us]ImageShack.us[/URL]