While the option exists to turn off rest until healed... it doesn't turn it off.
Just be sure to mem enough healing spells. Then you'll heal up just fine. If not, well, heal up before resting in an inn (as you can't choose to rest just 8 hours there)... or just rest for days in an inn, nothing bothers you, and time doesn't matter anyway
>>rest
>>regain hit points without magic(you regain 2-4 hps every 8 hour period)so if you are near death, and use this option, which is exactly what you ARE using, then it could take a LOOOOOONG time to regain all your hps.
The game only has 2 rest modes... resting (where you rest for 8 hours and heal whatever amount you heal naturally in that time) and rest until healed (where you rest, then cast heals/rest until you are fully healed and have all spells memmed). In either case, resting in an inn increases the amount of hp's you heal, based upon room quality. The only time you'll rest that long and not use healing spells is when you have no healing spells memorized and are using Rest Until Healed.