You're ruling 'insta-death' in a situation clearly covered by the rules.
I agree, and my ruling is within those rules. To address your concern -- who decides combat is occurring? The GM does. The GM decides if this action declaration results in combat, and then uses the combat rules to address this because combat is inherently uncertain (as you well note). If the GM decides combat does not result -- that the outcome of the declared action is already certain -- then you just narrate the outcome, per the rules.
This deprives Fighters and other martials of their core class feature of extra Luck (represented by their higher HP and HD) for absolutely no good reason.
This is more argument from jerkdom, not a rules issue. I can deprive any character of anything while strictly applying the combat rules just by using infinite dragons, so the deprivation isn't actually an issue of proper application of rules but a feature of being a jerk. I am not a jerk, so this isn't a valid argument about application of the rules. In point of fact, I point out above how I'd not reach this situation with PCs because I'm not going to use "rules' to have an NPC assassin sneak in and kill PCs in their sleep. Or, doing so would be at the end of such an outrageous set of circumstances that I have difficulty imagining it. I suppose if PC saw the assassin in their room and the player declares the PC goes to sleep anyway we might get here, but... I don't see that happening unless I'm utterly failing as a GM to begin with.
Instead, I flipped this onto ruling for PCs assassinating NPCs, at which point your argument is again mis-aimed -- I'm depriving my infinite set of NPCs their core class features? Nah, not an issue.
If you drop the argument from jerkdom, it would appear your primary issue with the ruling also drops. Or, at least, the primary focus of your counter-argument. I can believe that you might feel that combat is required anytime you get near violence, but that's not required. As I say above, it's the GM that determines if combat is occurring, not anything else. Violence can occur outside of "combat" and lethal or less-than-lethal results can also occur. Should that be normal? Eh, I guess that depends on your tolerance. It would appear it's far more normal in my game than yours, but it's far from common in my games. I allow for it, which it appears you do not, and I think that gives my more flexibility in application without once stepping outside the framework of the rules. That framework being that the GM determines uncertainty and when combat occurs and applies the mechanics as needed. If there's no need, I don't feel locked into using the combat mechanics just because they exist, especially in situations I wouldn't consider "combat".
But, please, please, please, do try to avoid argument from jerkdom if this goes forward. It's impolite to accuse others, even indirectly through example, of either being jerks or being incompetent to the point of jerkiness. It also doesn't actually support your argument, because postulating imaginary jerks as support isn't very strong of a position.