Really? I thought normally they just block your video (or in the case of music they mute the audio track).
Anyway can I ask how much footage you used that got you your strike?
I got my strike for making an AMV with Jam Project songs. It actually depends on your luck but I have seen many accounts that got suspended when they mixed gameplay vids with anime footage.
Its best to use instrumental or BGMs as your audio tracks cause any official songs will attract unwanted attention. In my case, Lantis(the company in charge of publishing music) was the one that caused me to get a strike.
No, in Normal Route it doesn't get ruined into mid battle as well. I think Lelouch triggers the ruin that time. Or Schneziel again.. I haven't done normal in awhile because I hate it. There should be a youtube vid of that stage though.
XBox Live: Tinklyknight (Not Gold at the moment due to various reasons)