Is there a way to make it so that if the player receives damage that would be a killing blow, they are instead transported somewhere and healed? We are making a sort of dream world and are going to make the player die pretty much But I don't want it to be an actual death, just leave the dream world type deal.

I would think OnDeath and OnDying would happen after the player is already dead, so not sure which functions to look into.

Would this be a very specific event or just when the player randomly gets killed wherever?

It would be easier to script if it was a specific event. You would do something similar to the Thieves Guild quest or the Sanguine Daedric quest where the player is immobilized or blacks out. Though I'll be honest, I tried to see how they scripted the blacking out in the "Night to Remember" quest but couldn't find it.

As I type this answer it becomes more apparent to me that I don't know how to do this.

Lol, well thank you for the attempt, and it's start at least It will be a specific event though, well a specific place in a specific quest stage, but it's not going to be fully staged.

In general I'd think you'd have a script that would call camera effects to black out and then move the player. The script would check for the player's health level during a specific quest stage or variable.