Actually it is possible to have all houses in a 9x9 block evolve to large insulae. Initially some of the houses will stay at medium insulae, because they have no space to expand into. You may check by clicking on them. When you delete the large insula next to one of them, it will expand. Now undo the delete, and the medium insula will seem to revert back, but if you click on it, it appears it didn't. You now have overlapping houses, and when the deleted/undone large insula, that has lost tenants, gets new ones and re-evolves, you may see various types of graphical distortion. For all other practical purposes you now have two LI's. If you do that for all the MI's in your block, you have an all LI (stable) 9x9 block.
It does not work for all blocks, sometimes the MI's in the process expand over roads, and in Pharaoh I also have seen them expand over water and statues. Nonetheless I can send you maps with these types of housing blocks. When viewed at different angles they can look very nifty, something like a huge insula, build from a series of LI's connected.
These blocks are of little practical use, unless you may want to cram a lot of people in a small area, which was what the insula were built for. In ordinary gameplay that has no application, in contests it might be relevant.