Whenever a guest character's HP fall to 0 they fall over and stars appear over their head instead of the counter. That happened in this case. The stars are there so the character doesn't crystalize and can make an appearance after the battle, which again was the case.

So either dispense with the stars or make pheonix down unusable. The programmers chose the latter. They simply changed the guest conditions so the plot would flow in one direction only.

I consider it one of the few weaknesses of the plot. It could have been handled better.