I would agree with you if the name of the dungeon were not Ala Mhigo itself. For Doma, the dungeon is Doma Castle and there is a zone called Doma that we can expect to see change with patches (though I agree it is smaller than usual cities).

The problem I have with Ala Mhigo is that cities zones names used to be City - Part X/Y, except for Gridania where it is New/Old Gridania. But Kugane's zone name is just Kugane nothing more. So, if Ala Mhigo were to be only one zone instead of two, the logical name would be Ala Mhigo. But it is already used by the dungeon...

I still cross my fingers, though!