Picture this: You have just been downed and a player is using flat damage to focus you toward the defeated state. Your ally finishes an enemy you had tagged. Hurray! You get to rally with 25% HP!
Scenario #2: You have just been downed and a player is using condition damage to focus you toward the defeated state. Your ally finishes an enemy you had tagged. Hur—oh. . . You had rallied but none of the conditions were removed on rally. You go down almost instantly. The enemy player then finishes you off.
This defeats the point of the rally system. If you lose all conditions on down, then you should lose them again on rally.