I would personally interpret it as the damage always applying to your main health-pool, and your cloak would disappear if you exceed the health of the animal of which you've taken the appearance from. I would probably let the person be disoriented an maybe harried for a little while after dropping out of the cloak from "death" too...
But then I have a hard time following all of the ED rules because to me they are in the way of great roleplay. I try to be consistent with my exceptions, but the rules do not allow for sufficient flexibility for my taste. Also, they are at time overly complicated.