If a sector capital is taken in war, typically several planets will defect with it. If player A and player B are at war, and Player A is about to take Player B's sector capital, Player B has an extremely strong incentive to "spite-redesignate" the SC right before the invasion completes, since this will prevent Player A from getting any defections. This discourages players from attacking other players at times when they know the other player is not AFK- even though that's the most fun kind of warfare.
A while ago, there was some discussion about whether planetary defections on sector capital capture should even be kept as a mechanic, since which planets defect is not easily predictable. I think it's good to have a reward, although the current mechanism is potentially overpowered, at a minimum fleets that are in orbit (not stationed on planets) should not be captured during defections.
If defection is kept as a mechanic, I think it should not be possible to instantly redesignate a sector capital, because of case 1. Instead players decommission a sector capital, which causes it to gradually convert to either an autonomous world or to a world of an appropriate type for the government- yards, hub, or infantry academy). The decommissioning process should not be instantaneous, meaning that the administration range is retained for at least a few periods, maybe as many as 24, and nearby planets should still defect if the planet is captured before decommissioning. However, once decommissioning has started it should be possible for the player to designate a new sector capital within 250 LY.