I remember seeing a documentary about Indonesian navigators, they do use the rising stars as their point of reference while we use the polar star. Also I read about the temple in Jerusalem and the Tabernacle) having had the door to the east for the same reason. So your scenario isn't that hypothetical, it did (and probably does) have real life application even on earth; using "north" or magnetism is just one of the possible and valid choices for describing directions that were used.

TL;DR: If you are interested, you'll be able to find examples on earth other than "magnetic north is up".