Who knows:
1) Whether the seller really died or if they just wanted to back out on the auction.
2) What else went on "behind the scenes"
Even if we assume #1 is true, there might have been a lack of response, a lack of timely return of payment, or some other BS going on. And if the seller's death shut down the eBay business (which I assume is the case if the seller's wife canceled the transaction), I don't think feedback is of much concern on the account. And if you look at feedback as a buyer and feedback left for others, they are still using the account.... Seems shady to me, but I am the eternal cynic.
And sorry, but even if everything was kosher and on the up and up, I have to side with the buyer on the neutral feedback. The fact remains, the seller didn't live up (no pun intended) to their end of the contract. Extenuating circumstances not withstanding, the feedback system should be based on the transaction and how it was completed. In this case, the seller, valid reason or not, backed up of the transaction. Should they have gotten a negative feedback for it? No, that would have been in bad taste. But I also don't think a positive feedback was warranted. I think neutral is very applicable given the circumstances.