>I'm not quite sure about what actually happens during a contest action.
>I know how the rules work, but I can't say I know what's actually going
>on. Any opinions?

Ah, that's a tricky one! It's been discussed briefly in this list before,
but perhaps it's time to look at it carefully. So here,s the way we deal
with it in our campaing, sticking with the 'Wirt and Bensien' example of
the Rulebook, p. 52. Wirt plays first in an action round.

As described in the RB, Wirt's guild (3) tries to contest Bensien's guild
(2). Success number is 10+3-2= 9
(Success number) + (Attacker's holding) - (Defender's holdings).
Wirt rools a 17 and succeeds.

Now Bensien's holding is contested. He won't have any GB or RP from it if
the situation isn't resolved by the beginning of the next turn.
The holding is contested, but still there; it takes two Contests to destroy
it (except level 0 holdings, who are destroyed with a single contest. If a
second Contest succeeds (on some later action), the entire holding is
destroyed, leaving 2 vacant slots.

Now it's Bensien's action. If Bensien wants to protect his guilds, he has 3
options (RB, p. 52):

1- Wait for Wirt to tire of the game and declares he isn't contesting
anymore. He may attempt a Diplomacy action, perhaps exchanging commercial
peace for money, favors, etc.

2- Have Wirt lose his attacking holdings.
That is, launch a Contest of his own against Wirt's holding. If he can
destroy them before his own are destroyed, he's be alone in the province
with his intact holdings an 3 vacant slots.
Note that if the two regent get into it, a large amount of RPs can
disappear in this exchange of fire...

3- Bensien succeeds a Rule action.
I'm not really sure about that one (opinions, people!). Either the RB means
a standart Rule action, which means there has to be a free slot in the
province, making this solution a mostly impractible one; or it means a
special Rule action with no holding raise, but there's no mention of it in
the Rule actions description... Another questions for the designers, if
they ever come back around.
In either interpretation, it would mean Wirt's Contest is nullified. He's
free to try it again next action round.

All in all, if the intend is to replace an enemy's holdings with our own,
that's a pretty long and costly (in RPs) process. I takes at least 2 action
rounds to destroy the other holding, then Rule actions to fill the
then-available slots. In Wirt's case, that's 4 action rounds, if he
succeeds in all his dice rolls (an unlikely proposition unless he spends
about 40 RPs and Bensien isn't combative).

An additionnal note about politics: when guilders are commerce-warring on
foreing lands, the local rulers could take exception. A holding that
crashes down is a holding that he can't tax anymore, so is might be wise to
send a him (her) a cuple or gold bars as compensation.

Unless the provincial ruler is the owner of the guilds you're attacking, he
can't do anything to influence the Contest die roll, but he can put his
weight on the subsequent Rule actions and you'll have to negociate with him
(her) when you'll open a Trade Route.

So you can add a Negociate action to your hostile takeover plan...

Hope it helps.