I think the secret to the 1 hit kill on the bosses is some heavy manipulation of luck. When they do their speed runs, they restart and restart and restart until they get the effect they desired. I remember watching the Dragon Warrior speed run and I thought it was terrible. The guy never got attacked once while walking through the world, and when the dragon lord got put to sleep (which never ever happens) he stayed asleep while the guy took 1 HP off him each turn until he was dead. I mean, the only enemy the guy fought was metal slimes! What are the chances of that happening?
Kinda silly, but those runs are a showing of what CAN happen. So, I guess it is possible for the bane sword to kill everyone. It is a slim chance, but it can happen.