That is right, however consider that those two players (if not allied) are always in competition. Every time a land is upgraded there is an attack on the enemy lands, which will become smaller and smaller.
So this is a unstable situation. You see a territory possessed by two players only when a fight is occurring between two active players. One of them will eventually win, and in normal peaceful situation a territory is always possessed by one player.
At least I see it in this way to justify it. It is different than in other more traditional games where you own a land, or you own not. There is not a real border. But I don't see it as a big problem.