Just my two cents: It is not overpowered but is definitely extreme. The 5% chance of instant death makes it a dangerous (and most likely) feared item. It is almost a cursed item and by D&D standards this curse would balance it out correctly. To be 100% sure I would omit the saving throw versus death during a killing blow.
Zuvio made a good point earlier about people re-rolling stats and c'mon I don't buy this...everyone has done it at some stage.
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Still I feel like a child when I look at the moon, maybe I grew up a little too soon...
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