1) That's not how I originally imagined it, but I'm gunna give that a "sure why not."

2) If you are killed by something in the story you die in real life. That is, if you are being killed by something that is actually present. If your character was just handwaved as dying you could just pretend to be dead and get away with it, probably. If your character dies via a violent action on the part of a book ghost, however, they will actually hurt and possibly kill you.