Okay, how's this?
My units have never died when lost in time and space (I think).
But I'm less certain now, since you say yours came back with new afflictions.
Oh, wait: My units nearly always are scripted for returning (the lost in time and space ones). And as I remember, they either land in an enemy province with 2 pearls left and cast returning, or land in a province of mine and don't use the pearls.
Now ... was this before or after I started giving my void gate guys 4 pearls instead of 2? I've got no idea.
But if they were in combat while lost, they should show up in my capitol with no pearls, instead of in an enemy province. Unless Returning doesn't work in the lost in time and space combats.