I noticed a few instances while playing where someone would focus an attack which would normally kill them if it had hit them, but instead they’d live. I decided to test things out to figure out how absorbing attacks at low life works.
What I found out is that if you focus attack a hit that would kill you, the extra damage (plus a small percentage extra) is taken off of the life you are allowed to regain. If that would put you below 0, then you die instead.
For example, if Ryu is at 71 life, he can focus Ryu’s close fierce punch, even though it does 75 damage. However, the amount of life he can regain back is less than what he started with (since it did 4 damage more than the amount of life points he had).
The same thing applies to absorbing a LP Shoryuken. Ryu starts at 71 life and absorbs a LP Shoryuken from Ryu which does 98 damage. He will live, but have less life to regain than in the above example (since it did 27 more damage than the amount of life he had).
So basically, you can absorb something that would reduce you to about -80% of the life you currently have. I’m not sure of the exact number, but here are some of the cases that straddle the boundary:
Ryu at 35 life, takes 68 damage, which would put him at -33. Result = dies
Ryu at 71 life, takes 120 damage, which would put him at -49. Result = lives
Ryu at 53 life, takes 98 damage, which would put him at -45. Result = dies
Ryu at 43 life, takes 75 damage, which would put him at -32. Result = lives
I presume this would work the same way with Super Armor attacks as well.
Edit: The damage that is done to you after you reach 0 (which reduces the life you can regain) is done without any damage scaling (i.e. at 100% damage instead of 75%).