Hi Vacio,
I don't quite understand your explanation - and I fail to see the merit of your 'solution'.
First, you say that you get a lot of complaints of Armenian participants because their photos are tagged with an Azerbaijanian template. To me, this suggests that somehow, the buildings on those photos are recognized by the Azerbaijan government as monuments. That just means the Azerbaijan government thinks those are important buildings.
But then you say that the
wlm.az competition only lets one city participate (probably because the Azerbaijan government only recognized monuments in that city. That confuses me, because it seems to contradict with your earlier statement that you get a lot of complaints.
The situation as it is (or should be) now is, that people can add heritage templates when a government recognizes that building as a monument. This is very helpful in many situations because many people simply forget to add this information. This includes a crazy situation where the Republic of Ireland (which does not participate by the way) would recognize a monument in the middle of Azerbaijan, then also this could be added. It is simply a sign of appreciation and matter of fact.
Also, when a picture is 1) a monument recognized according to Country B's national definition and 2) fulfills the criteria of a given competition (submitted in the right month, license etc.), a template indicating that the picture participates in Country B's national WLM competition can be added.
Based on these templates, the relevant categories will be added.
But: this can only be /additional/. Templates like this should not be removed for other countries (with of course obvious exceptions, such as if there is a clear mistake etc - like last year when someone submitted the Eiffel tower in (I think) the Indian competition).
I don't see good arguments to change this. I know this might be confusing and upsetting to some people who feel strongly about these cases, but then we should make an effort to explain that Wikimedia Commons, like Wikipedia, has a sense of Neutral Point of View. We don't decide which country is right, or even whether a country exists. Especially in these cases, we're focused on documenting these buildings, which clearly both the Azerbaijan and Nagorno-Karabakh government agree upon that they are important cultural heritage.
Lodewijk