Life itself has low-health creatures, so this would be most practical in a duo deck, though that brings up an interesting question... do these stack? If they do, you could lay down three of these, Basilisk Blood your own creature, then Immolate it for 60+ healing. Either way, most combos are going to involve three or more elements at once... like the above Earth-Air-Life with Firefly Queen, or Darkness-Life-Death with Voodoo and Parasites. Perhaps Gravity-Life-Water-Air? Run Supernovas, flying Titans/Massives, and pop things with Shockwave. And of course the combo you mentioned, Armagio Catapult.
I think it should be the maximum HP at the time of creature death. This allows buffing before killing to boost the healing, while also making damage spells more useful - they don't cripple the HP gradually before death. Thus Owl's Eye could become renewable healing coupled with Firefly Queen.
The rounding should stay the same on both cards for simplicity's sake. Such fine distinctions are only going to cause confusion.
Keep it a Life card, the concept fits and, as Zblader says, non-death death triggers are cool - the more incentive to build, say, a
deck and milk Retrovirus/Plague. Entropy gets some mileage out of this too, if you buff a Cat, you can make it into a portable Shard of Gratitude!
