In game. (obviously

And only in principle, in the fact that it leads to interesting RP situations, and it's better than just talking about how much limestone you're gathering or some equally mundane subject.
And, in a real society then that kind of thing happens. If you don't mind people going around hitting people and stealing things, to make a decent society simulator, then it's only fair to let people rape, be racist (if there are races in the game), lookist, homophobic and pretty much do any other unacceptable real life stuff.
It's up to the 'good' characters in game to moderate it. And, i suppose, if a player does get too uncomfortable they could always just ignore that character and focus on their other ones until it dies...
Anyway, about this 'near death' thing, why does it have to be when you're over 100% dead? I think it would be much more plausible to have it for, say, anyone who's 90%+ dead or something. I know, it means effectively everyone would have 10% less life but it's much more realistic that way. And we all know Cantr is all about realism.