I really think the problem here is as follows:
1) Everyone taking things much too seriously.
2) Everyone taking things much too personally.
3) The social contract between players, and with players and their GM, is not firmly established. Basically what I'm saying is problems as they come up need to be honestly and straightforwardly addressed by the GM (or presented to the GM, if it's coming from the other end).
Well, as regards to 1) and 2), I think Lantz has good reason to take this seriously, since killing Toshi would wreck the RP for him, and I don't blame him for taking it personally when I know for certain that Magos
is specifically targetting his characters, and has attacked him with clear intent to kill (and an expectation that it would succeed) multiple times already.
As regards 3), yeah, I think Elf has handled this badly. She clearly has issues with Lantz's RPing, but rather than openly addressing them she's just sanctioning Magos to smack him on her behalf, and in a game-wrecking manner (for Lantz anyway).