Well, after some testing it seems that after defeating Pumpking's horseman the balance change does not occur, but after opening the treasure bag he gives you then exiting and re-entering the world the post-terra lord balance comes into effect. I don't know why this is the case, but it happened that way for me 5 times in a row after restoring backups, and the balance change only occurs after you exit and re enter, but once it changes thats it, it stays that way forever unless you cheat in the item that fixes it. Maybe the presence of ultima essence in the world is causing problems or something? That is the only thing I can think of