Well you should have done more the last round. Empire was my faction too.
What happened in PlanetWars dictates what happens in the fiction, there is no difference. So yeah, Empire are a non-entity with only a single planet (Which was given to them by Machines anyway!) while the biological humans (genetically engineered or true bred) formed a political bloc against the post-humans and machines. Dynasty didn't 'Win'. The war ground to a halt. We don't get to make any more stuff up than what happened, and that's what happened.
Empire will be rolled into the post-human faction, as they were entirely a part of that political bloc at the end of the last PW. Frankly even if the next round was not 2 factions, the political blocs the factions formed at the end of the last PW meant there were really only two anyway.
Also KR got his terminology wrong. The Old Empire (Empire of Earth) was destroyed by the Ascended/Valhallans. The last Emperor was Conrad when they laid siege to his Throne world and wiped him out. This is the Second Empire (The reborn Empire), which was formed from the remnants of the last but is kind of like the Byzantine Empire or Holy Roman Empire was to the Roman Empire.