State-based actions, lethal damage and lifegain triggers

[IsThisACatInAHat?]

I have a quick triggers/ state-based actions question that came up in draft tonight. One player was tapped out at 4 life with only a Blade-Tribe Berserkers equipped with Sylvok Lifestaff. His opponent attacked with Vulshok Replica, Etched Champion and Carapace Forger . The Berserkers block the Forger. What happens?

I thought the Berserkers and Forger would trade, Replica and Champion deal lethal (to -1) and state-based actions cause the defending player to lose the game with Lifestaff's lifegain trigger on the stack, before the active player would receive priority. I wasn't sure, so I didn't say anything (I don't think I can as a spectator anyway?)

Instead, the players agreed (between each other) that Berserkers and Forger traded, Replica and Champion dealt 5 and the Lifestaff put the defending player at 2. During his turn, he untapped and swung for lethal with Indomitable Angel. Was this wrong, or was I (and why)?

[rockout]

The person attacking won the game because for sylvok lifestaff to trigger a creature would have to go to the graveyard and, in this case, the creature went to the graveyard due to damage and this would mean the defending player is at -1 life (state based effects check on damage) game over with a gain 3 life trigger from the equipment.

As a spectator, you are allowed to ask both players to stop because you noticed something wrong and to call a judge over and tell the judge what you witnessed so the correct ruling can take place.

edit: I apologize for the lack of punctuation.