Bsellick,
The healing effect is intended and remains in the rest of the game. Every time you fill up one of your 10% markers of experience, you will replenish all health and mana. At low levels this doesn't take long to accomplish, so you will seem to always be full. The last time I was really paying attention (when I was around level 19) it took me 10-14 kills to achieve a 10% bubble filled. So as you go up in level the time between experience healing gets slower.
Also, remember on the Trial of the Isle, the moment you pick your class (fighter, mage, etc) you become level 3. So don't feel too surprised to reach level four quickly. ::grin:: But since the island is capped at 6, yes, you'll reach it quickly. When I was there, I did all the quests I could do, and I can attest that at least 75% of them were done while I was already level 6. However, this game will let you gather experience for up to 2 levels past a cap! It just won't give you the levelup yet. So when I left the isle, I had 200% experience above Level 6 (if you mouse over the bar, you can see what you have). What this meant was, when the cap was lifted by my becoming a citizen, I went immediately to level 7, and then immediately to level 8! Nice!
Death is much easier here than in EQ1, I agree. You do still take experience debt, though, and it causes wear and tear to your equipment. At a low level this isn't significant, but when you get higher and get some valuable gear, and experience takes longer to acquire, you'll appreciate trying not to die. =D Also, if you die in an area you aren't able to get back to, just petition and a GM will restore the body back to you.