Yeah the timeline is messed up. Kotor's Revan Empire could be said to be built up from Republic deserters, but the hidden one was just too big to dissapear overnight for Desolus to have only studied them in the history books.
I figure BW's initial idea was to have the Sith Emperor devour them, but than they dropped the concept. Now there is a big Sith Empire and it needs to dissapear... somehow. My initial thought was that it eventually just splintered but that would leave.... splinters. Nothing the Jedi can't clean up, but maybe in five centuries not fifty years.
Maybe BW abandoned the idea as the Sith side always seemed fuller a few years ago. No idea what it is now, but back then the European server had like a 2/3rds split. They already made a big jump by making the tech look more up to date because the Clone Wars was out.