Neutron scattering measurements on the spin-ice candidate material Ho$_2$Ru$_2$O$_7$ have revealed two magnetic transitions at T $sim$ 95 K and T $sim$ 1.4 K to long-range ordered states involving the Ru and Ho sublattices, respectively. Between these transitions, the Ho$^{3+}$ moments form short-ranged ordered spin clusters. The internal field provided by the ordered S=1 Ru$^{4+}$ moments disrupts the fragile spin-ice state and drives the Ho$^{3+}$ moments to order. We have directly measured a slight shift in the Ho$^{3+}$ crystal field levels at 95 K from the Ru ordering.