I'm glad I'm not the only one who has noticed it! I actually somewhat like that there is the emotional death aspect (though I acknowledge it's not at all realistic), but I think it should happen when it really is an emotion that is extreme (meaning it should almost always take more than one thing causing the base emotion to get them there).
I also from the beginning have taken issue with the fact that hysteria deaths are amplified by doing all the "right" things in the game (keeping your sims' environment nice, serving them good food, keeping their needs filled). To me it really feels in a way like it is a punishment to players who are good at taking care of their sims.