I'm not sure is it a bug or a feature, but searching gave nothing. It looks more like a bug to me.
The thing is that i've just performed some weird kind of seppuku with a mud ointment.
The charecter had 7 hhp ramaning and a "punch sore" wound of 53-ish. After applying the said ointment to it, i've died.
I guess what happened is that the game has added a "muddy perspectives" wound before subtracting from a "punch sore" value, thus causing hhp to go below zero for a moment.
A glorious death.