Young Bearded,
My reasoning is this:
The rules for Epic Heroes say that you can move to another formation 'At the start of his formation's move'. (p68). If you move before the test for disordered formations is made then, IMHO, you are not part of the formation's move. Once the dice are rolled you are.
I agree with you that the 'so on' bit should include magic.
More importantly, what part of these rule interpretations would have stopped my Balrog adding to its tally of 1 King's Champion, 2 ballista, 2 companies of Dwarven archers and 2 (or was it 3?) companies of Dwarven warriors?
Stephen