The decrepitude of the Old Palace and the sprouting of a Tree within it, that eventually violently tears down the old palace and yet provides a new one, is likely an allegory for Brust's view of Marx's theory of Revolution.
The violence committed in the Palace's name against Miklos drops blood which forms the seed of the Tree of revolution.
Also like Marxism, the practicalities of reconstruction of a new order as aftermath of the Revolution is rather glossed-over. The Tree organically creates a perfectly livable new palace, without any human agency's help.
See also: Meta:Brokedown_Palace