This system was added to Planeshift, because many players were abusing
the quiting of the game.
The players involved quit Planeshift as quick as possible, when they were nearly killed
by the NPC, to not end up in the Death Realm.
At this moment the system protects against this and keeps you're character "online".
The fight you were having continues till either you killed the NPC or you get killed by the NPC.
In some cases neither of you can get killed and then the fight would continue endless.
For this problem is an another solution added.
The NPC involved needs to be killed by another player ingame then.
This can take a long time sometimes, like Laragorn mentioned.