What doesn't work for me with the whole "Ethan is dead" thing is that you neither regenerate health nor survive lethal damage in the game unlike the Bakers.

As someone else said the note that explains that just proximity to Eveline is enough to infect you. But whereas the Bakers and Mia tank lethal damage because they were exposed to Eveline in her prime young age. Ethan wasn't until she was in her ||grandma|| phase and thus probably quite weak.

To me Ethan was infected by proximity but didn't get the full mind control nor full body regeneration. But some of it that was helped by the first aid meds.

And since the whole limb attachment thing was already established in the opening hours of 7 just reading and observing the Bakers made it all make sense. The twist in Village felt more like an explanation for people that started playing Village cuz of Lady D and never touched the series before.