I�m going to check this out for myself ASAP because that is just a flat-out game breaking bug, and it�s pretty egregious all this time after release. Have you tried turning your entire party invisible and just going past all of those people? Only problem is, that might break other things down the line, or you might have to kill the dude anyway, after the whole killing the Act 2 boss thing.
Btw there was a game breaking bug after patch 4 for an entire month with no communication, so it may be a while. Just gotta be patient and they�ll get it sorted eventually.
For anyone who stumbles across this in the future, I was able to progress the fight by pickpocketing Lann Tarv prior to combat and significantly reducing the number of items in his inventory. After stealing back a whole boatload of junk I sold him (he was my main junk dump in Act 2), the game did not crash on kill. The game still lagged majorly (several minutes), but ultimately recovered instead of crashing. I suspect the issue id related to how much stuff is in the NPCs inventory when they die.
