For the record, Shojo was not the determining factor in victory or defeat. It all came down to the battle in the throne room. If Soon had finished off Xykon and Redcloak, Azure city wins, even with the massive numerical advantage of the Hobgoblins; without effective, high-level leadership, even if the city had fallen that day, retaking it wouldn't have been all that difficulty, and under such circumstances the Hobgoblins might have even retreated on their own.

If Xykon and Redcloak are in any shape to effect the battle, the battle is lost, Shojo or no. Epic level sorcerers can screw a battle royally for whichever side the sorcerer happens to be fighting against and Shojo was in no position to do anything to solve that particular problem.

So no, Shojo didn't lose the battle for Azure City by not coming back. Azure City would have been stronger with his continued presence, with morale more secure and with more nobles likely to participate, but Shojo or no Azure City was pretty royally screwed, with a victory by Soon it's only real hope. As such, Miko ultimately lost the battle for Azure City more than anyone.