An Army Commander is a leader,so can be targeted, and would count as a Victory Banner (same as any other leader)
If the Army Commander is killed, is this equivalent to losing the leader in a leader check? I have to think it is highly similar, and therefore think the Bodyguards would surrender and be removed, also scoring 1 banner. Seems the cleanest rules path,though overly powerful in my view.
“I dreamt of worldly success once.”
― Miyamoto Musashi