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This happens all over, I'm playing as the Count of Lucca (now Duke of Pomeralia), and I have about half a dozen other di Lucca dynasties that popped up and are serving as vassals under me, they're treated as seperate dynasties though and aren't part of your "tree", inheritance (unless elective), or anything else afaik.
 
Well because my imagination doesnt wan to handle thinking of a dynasty that isnt realted at all but just has the same name as cadet branch that would actually be the very close to it and actually be the same dynasty. With Wittelsbach its especially unnecessary as the castle Wittelsbach isnt in Niederbayern anyway in real life but in the games Oberbayern or Kempten province. So renaming the castle Wittelsbach in game would make sense twice.