Wow, Jack certainly was not kidding when he said that the city "was unlikely to exist in this form for more than a few more minutes." Just a few exchanges of dialogue into the parley, and already the roof of the garrison is covered in acidic battle crap!
Looking again at the previous updates, it appears as though the garrison in Spacerock is different from the garrison in Gobwin Knob in that the Courtyard (I'm assuming that is the courtyard, rather than a previously unknown garrison zone, but it could also be a part of the tower) is entirely enclosed by walls and a roof. Presumably, this acts a lot like the walls surrounding Gobwin Knob's garrison, except that it protects against aerial attacks in addition to ground attacks from the Outer Walls zone. Well, at least until the ceiling has been breached by acidic battle crap. I'm really impressed with how much of the ceiling was destroyed without Tramennis or any one else noticing. Looking at previous art, that building is HUGE, and sizable portion of the ceiling has been destroyed. Definitely enough for dwagons to fly through.
Since the boundary between the Airspace and the the garrison is, well, the ground, and the ceiling that formed the boundary between the Courtyard and the Airspace has been melted, that means the dwagon armada can enter into the the building, but STILL be in Airspace (assuming, of course, that the building enclosing the Courtyard has a cathedral ceiling, rather than many floors). Once the archers open fire on the dwagons (which they will presumably), the dwagons can go into the Airspace above the Courtyard but within the walls and under the ceiling of the building, and the red dwagons can start torching the walls of the building. Meanwhile, all of the archers are in the tower, unable to fire on the dwagons already in the building. Yes, they can redeploy to the Courtyard, but not before the dwagons deal significant damage to the building. I'm not sure if the dwagons can attack the non-archers in the Courtyard, as the wiki only mentions that units in the Airspace zone can attack the tower. However, if the dwagons can attack units in the Courtyard after breaking through the ceiling, they should be able to buzz the units in the Courtyard, until redeployment of the archers and casters happens. Otherwise, they may need to let the fire spread and barbecue the infantry in the building.
Then, as losses steadily occur on both sides, Wanda can decrypt dead dwagons and freshly croaked infantry and heavies. They don't even NEED to do the fall/decrypt strategy, assuming Airspace can attack the Courtyard. Well, not the intentional fall then decrypt strategy, at least. Enough dwagons will probably be shot down, and enough Jetstone infantry killed, that Wanda can decrypt dead units on the ground without even intentionally subjecting units to falling damage. Of course, this all depends on the exact mechanics of which zone can attack which subzone and of how fire affects a large building, and how quickly units can be redeployed in the city. If fire doesn't spread and Airspace units can only attack the tower, then they'll probably have to do the fall/decrypt strategy. Fortunately, Jack and Wanda have their healomancy scrolls ready to save each other from incapacitation. Also, Jack's foolamancy can probably buy enough time to reach the tipping point where Wanda has decrypted enough infantry to take the garrison.
Anyway, sorry if this is a rehash of previously mentioned theories.EDIT: Ok, I'm wrong. Fall/Decrypt is the only way the dwagons can attack the infantry. My post on page 4 gives an explanation. Also, it looks as though the building is called an Atrium, as explained in Book 2 Text Update 25. I shouldn't post at 2 AM.