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This is tricky, but I think I see what's going on here. Yes, the modelLists returned by gallery-model-relate will automatically update as the model data is changed. In your fiddle, you aren't actually changing any model data. You are destroying a model.

gallery-model-relate internally uses gallery-model-store to hold on to a reference of all model instances. Even if you've destroyed a model, it is still in the model store, and its data is still in tact. This is why you aren't seeing your modelLists update automatically.

I've slightly modified the fiddle to remove the model from the model store at the same time it gets destroyed. I think this yields the results your are looking for. http://jsfiddle.net/DwQsb/16/.