Yes, it still lives. Incase someone doesn't know this abomination of nature:
It happens if you and your enemy both shoot eachother, but one of you dies. The dead guy's bullet won't damage the enemy. I think it may have something to do with becoming invulnerable for a micro second when doing a kill, or something similiar, since it can occour when your target kills someone, just when you hit him, and he receives no damage.

Yes.. You cannot imagine how much I hate this.. This is what makes barret overpowered vs an m79.. Since the barret is so much faster, if 2 players shoot to kill, the m79 will die first, and his shot won't usually kill the barret, because he's dead before it explodes.

Hm I thought I fixed it some time ago...

and I thought it's just the lag for me ^_^