Retail does show you as in the same zone when you are in the mog, so how Kjlotus describes it does wind up being the most retail like. Not that I mind either way - whatever works, ya know?
We recently had an issue where we had to jail someone who retreated to their MH. We had to wait for him to log out and then moved him manually in the database, so we got the job done, but was a touch frustrating. Hopefully it works out.
If you have probs like that again use the force logout command on him (@logoff Jackwagon) the second he comes out. Repeatedly.
Or dispense some wrath - I'm a very evil GM, I know how to truly torture misbehaving players.
@addeffect Jackwagon <nasty things like curse or even KO go here> ...Also, did you know you can even stealth tack on stuff like negative treasure hunter and +damage taken? It's pretty easy to script yourself a customized @wrathofgod by taking a look in @godmode and some JA's to see how to use addMOD and addEffect...When he's taking hundreds of damage from TW mobs and all his timers are saying 9 days till he can cast he'll figure it out...I even expand agro radius (take a look at the
stealth trait).
I haven't tried forcing on the pvp flag used in balista yet. That might be
fun.
Never mess with the GM, you will not like it when he is angry! 
Mwahahaha
Ed: typing error