I read that differently, Prussian Nationalists and Saxon Nationalists won't fight and Prussian Patriots and Saxon Patriots won't fight, and by extension Sunni Zealots and Catholic Zealots won't fight but Patriots will fight Nationalists will fight Zealots.
What happens if two rebels fight eachother and your army enters the province?
I've seen in the past (at least in IN, haven't had a chance to test in HTTT) that any army that enters the same province as an enemy army fighting rebels will be destroyed upon the end of the opponent's battle.
Regardless of morale or numbers apparently: I've had 15k 100% morale armies with a decent commander be destroyed by a 14k (12k losses), 10% morale army of lesser tech. Both enemies had faced severe losses yet instead of fighting demoralized troops, my army simply disbanded. It would make more sense if you either choose a side to support in the battle, or simply wait and fight the winner as you would normally (and yes, this is abusable to quickly beat low morale forces obviously).
I'm pretty sure this bug is now fixed, the 3rd army to enter the province will sit and wait paitently for the first two to duke it out and the challenge the winner.