This is the same bug as reported in this post: Non lvl 70Characters are incapable of dying in Dragon Isles - #18 by Psark-dathremar
Per comments there, a dev has acknowledged this as a bug in an interview with Windows Central, and it is being fixed in coming days.
Hopefully this is true.
I haven’t found any detail yet on the forums to confirm. And there doesn’t seem to be a fix mentioned in the PTR. Has anyone tried the PTR to see if the bug is already corrected?