Further to the above, it is possible to decommission a foreign army command, send the HQ to a CSA 3* general, and have the general command a new army formation, in foreign national colours.
In my current game some obvious house rules to prevent unlikely situations have come about to avoid situations like the above.
For example: no Corps can be commanded by any other army other than their own nationality. Divisions, however, can be commanded by another nationalty's Corps or Army commands. Currently limiting it to ONE foreign division per Corps or Army command.
In the current game I have going these issues have become important as the CSA in '63 has launched an offensive up through W. Virginia to capture Wheeling and threaten Pittsburgh from the south. Meanwhile, Foreign entry was triggered and the British stormed through Buffalo and reached the outskirts of Pittsburgh from the north themselves before being driven back slightly.
I think it's conceivable a single division or so could be commanded by a foreign Corps or Army command, but certainly not an entire Corps.