It could be a bug, or a feature: developers claim features are intended, unlike bugs, but both could be pretty much the same.
Of course, Phoenix Pyre kamikazi don't even die, so you will need to keep on attacking them (and getting killed in the process)... At least the enemy isn't using Mass Relief.
Well, it won't go on for ever, but close enough: Phoenix Pyre doesn't work if you are unconscious, and you get tired when you "die"... but that can be solved, if you have something curing fatigue.
If you keep on being reborn with no intention of dying, the battle will nonetheless be over sooner or later: after 50 turns, the attacker will withdraw, and everybody will die after 100 turns (if memory serves).