It really was supposed to be this way it seems. If you hadn't died during your pre-introduction then I think Dio would have from that really mean disease/poison. The initial save is something like a DC13 or status poisoned and minus 5 to maximum HP, the kicker is it is then treated like a disease and you have to roll once a day at a DC20 or lose another 5 HP off your maximum, everytime you fail the DC goes up by 1, if your maximum HP becomes zero you die. No NPC around that can cure disease until Baldurs gate So help would have been around 14 days away and that is well over his maximum 40ish HP.
The paladin you made can cure it with Lay on hands and all was well.