My dice always seem to desert me when I roll for instability. It never seems to fail that when I'm down to one stand left in a unit, I roll a "1". Pop! All gone!
Yes, the characters are removed as casualties as well.
I do have to admit, I was able to get my sorcerer to bring one stand back to a full unit in one round of spell casting by using the Rod of Repetition and the Summon Daemon spell.