Expected: dying to a mob shortly after engaging players in a PVP encounter should not incur xp loss.

*snippy the stuff*

This has happened to me once for sure, possibly a second time (though there was a short delay between the pvp and death in that case, so I might have just ran up against the timer).

So in this case, there's ONE detail you are missing!
You were (WANTED). That's it.

Thanks for the detailed post, made it easy to find/track.