It was my understanding that Drest, the marooned Juggernaut pilot in Raincatcher Gully was actually a member of the XIVth, as he was actually assigned to nearby Castrum Occidens (his Juggernaut was shot down by the Maelstrom, which is presumably the wrecked Juggernaut in the nearby swamp) - of course that doesn't preclude that he was not formerly part of the VIIth as well, but the main thing is, he was targeted for death because he deserted, as you mentioned (lacking the lorebook I only have in-game information and info from other sites to go on). Either way, he deserted because he hates being forced to fight for a cause he does not believe in (having come from another land, presumably Othard), and just wants to return to his family.
Well, 1.0 stated that there was a Wall sealing Ala Mhigo off from the rest of Eorzea even before then, although the exact time it was built is unclear, it would have probably been not that long after the Empire's annexation of the city. It was never called anything other than simply 'the Wall' and that the Ala Mhigan Resistance acted as a kind of Underground Railroad guiding refugees out of the city under it to freedom in Eorzea.. at least until the Resistance's ill-fated attempt to steal a Garlean airship and turn it against the XIVth in Ala Mhigo (Gaius single-handedly wiped the entire Resistance cell out).
As far as 1.0 went Castrum Oriens did not exist physically or was not even mentioned at all, so I'm liable to take it that the Wall preceded Castrum Oriens' construction (by all accounts Garlean engineering is very adaptable and can be quickly constructed and modified with little effort, being mechanized and all, so this does not seem surprising). But if the lorebook says differently, I'd take that as a retcon. The castrum on the Ala Mhigan side of the border also being called Castrum Oriens may just have been for consistency's sake, rather than having any lore reasoning.