I had an idea on how they could fix and simultaneously make Walking Dead worse.

When you die with Living Dead active, you don't die and are inflicted with Living Dead, as per normal.

Now, however, Living Dead acts more just like Holmgang, you can't be brought below 1 HP under most circumstances.
But instead of dying after ten seconds, if the debuff isn't cleansed, Living Dead instead acts like Brink of Death.
So, now you won't die if your healer can't heal you an equivalent worth of your max HP.
But you'll hit like a wet noodle because you're basically a zombie.