I think one of things that makes deciphering a smiley story rather hard is not knowing which, in a sequence, are related to the same "side", or like, which parts are some sort of dialectic with every other smiley belonging to the same character or faction. Which allows for multiple interpretation, which can be a good thing, but it's the kind of thing that makes my mind go blank at the Aubedore prompts of the Plot Generator
In your example, I'm pretty sure a ruler gets stroppy at a subject for a perceived misbehavior, and revolution follows. I think the middle part described some idea the rebels come up with to win during a gathering, but buggered if I know what the stratagem could be. Some magical wall, perhaps? I think my mind is led to try and find the True Answer rather than come up with my own interpretation and then compare notes...
I think your read on this was pretty much what mine was. Basically, every new line is like a camera cut. So it starts with a ruler who is being praised, but then one of the praisers, probably a peasant of some sort, seems to pose a question or want to say something, which displeases the ruler, eventually leading to that peasant's imprisonment or death. This leads to the peasants getting understandably upset and forming a mob, which attacks the guards. The fight is even until, as you say, somebody comes up with a strategy, which I envision as someone "running away" to lead the soldiers after them, but then running into a wall (literal or symbolic) at which point the mob closes in around them. The mob then goes after the ruler and, as you would suspect, kills them.
But yeah, that's just my reading. Thanks for giving yours!