As a casual SimCity player I can tell that Mayor Mare could easily demolish Twilight's castle at any given moment. Ponyvile would probably loose some tourist income but hey at least she could finally buid the police station and the fire department that the city needs
Twilight is still more useful then the Maxisman in the game. He would not help your town even if the giant lizard just decides to rampage through the town because it is overloaded with trash, and your landfill is full.
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The castle is there due to magic, demolishing it might have pretty bad consequences. 