It's from the possession rules in Occult Adventures, the rules interaction section.
"Domination: Dominate spells are often confused with possession, as they produce superficially similar outcomes. However, domination and possession are not the same. Domination is mind-control, enslaving the target's mind and forcing it to carry out the caster's will; thus, the caster doesn't directly control the target's body. The target's dominated mind merely carries out a mandate given by the caster with the means, knowledge, and experience it has available."
"At 20th level, a mesmerist can permanently mentally enslave a creature. When the mesmerist successfully affects the target of his hypnotic stare with an enchantment spell that requires a saving throw, he can force that creature to attempt a second Will saving throw with a DC equal to the spell's DC. The DC is reduced by 5 if the monster isn't a humanoid. If the creature fails, it becomes a permanent thrall to the mesmerist (as dominate monster) until the mesmerist dies. If it succeeds, it can't be affected by rule minds again for 24 hours. A mesmerist can have only one creature enthralled at a time. If he enthralls a new creature, the previous one is set free but is unaware that it was enthralled by the mesmerist."
Your arguement is invalid as this mimics the spell Dominate Person, it is not a possession effect, the person is your thrall not your minds vessel - the dominated mind will swap with the new possessor, but remains dominated.
If anything you have just agreed with what I said. Yes someone who uses possession can override the Dominate effect but its still active so once the possession ends the Dominate is still active. And if anyone targeted the newly possessed body, the possessor's consciousness would be the target, not the Dominated creature or its Dominator