It's never really specified. Here's how we do it IMC (note that we changed a lot of other things about the Paladin, so not all of this will translate).
A Paladin's Mount is an ordinary animal or beast, enhanced through the both power of the Paladin's god and the power of the individual Paladin. This changes it into a Magical Beast (and later into a Native Outsider IMC).
While it has intelligence, it isn't true intelligence; it's basically transferred from the Paladin. That's why the mount doesn't gain XP in the normal way. Most of the abilities work the same way; it's not that the Mount is inherently magical in itself, it's that the deity is giving a small amount of power to the Mount each day to keep it "enhanced" for his champion, and the mount has been magically bonded to its owner to gain more powers.
So, if the Paladin dies (or changes alignment, or really pissed off his deity), the Mount becomes "unlinked", because the deity has stopped giving power to the Paladin (and by extension, his Mount). It drops to the abilities it had when first called at level 5, including a decrease back to INT of 6 or so. However, even though its INT is still above 3, it's not truly sentient, and so can't take character classes or gain XP.
If the Paladin is resurrected, redeems himself, etc., then the Mount regains its full power.
The drop in power isn't instantaneous, though; we do it more as a gradual thing, where the Mount loses one level every few days.
As a side note, a Mount can never get a new master IMC, since it's been touched by a specific deity and bonded to a specific Paladin. Mounts of deceased Paladins are usually cared for by their Order, and used for stud, although they're intelligent enough to want to roam freely most of the time.
Anyway, bottom line, make up a rule that works for you. There isn't really a standard way of doing things, AFAIK.