So essentially the martyr headed for donatu exploded, killing the outpost, but because all the enemy subs were destroyed and Donatu was never taken, it finished the puzzle. Only, it says at the top, "game over, opponent wins." I didn't do any more trues beyond these screenshot because it passed me, although had I altered my last move slightly, I would have passed properly within the parameters of the puzzle.

Technically, you're holding Donatu until the sub arrives. So while indeed you're losing your outpost and your queen is killed, you've worked it out within the parameters of the game. It never asked you to survive.

As you say, there's also a slight alteration where you save your Queen.