As I understand it...

The "city" around the Crystal Tower on the First (Norvrandt) is populated by refugees from the Flood of Light and Sin Eaters. It only popped up (relatively) recently and doesn't appear to have anything to do with Allag.

Second, Hydaelyn is known in Norvrandt - "Arbert" specifically calls Her out for not answering their prayers for deliverance when we finally get another face-to-face with Minfilia / the Word of the Mother.