Instant grief fest.

The only thing that is keeping the non-psychopaths in the game from running around PK-ing each other is the threat of real death, and even that doesn't work if they're like Rosalia and don't believe it.

I'm a bit surprised the GM hasn't shown them reports of bodies, doing a public display to prove his point. I suppose you can always argue that he can fake it all, so it is really all pointless. The psychopaths are going to murder other people and probably get off on it.