It's similar to bleed if you use the narrower definition.If I, as a the player, feel guilty about it after the LARP, even though the character, who is thoroughly evil, felt no guilt, that's similar to bleed.
If you use the broader definition used (proposed?) by Montola, then the example you give is definitely bleed. Personally I prefer the broader definition, because it can be used to talk about a more general phenomena of what you take into a larp and what you take out. I think it's the way many Nordics mean bleed because they're interested in the sociological angle of how games affect players beyond the game, and what players bring into games, but that's just the impression I have.
Like I said I don't think bleed is a great word for this wider meaning, I think it was chosen because it sounds edgy rather than its actual merit.
In my opinion, the more narrow definition for bleed is just a synonym for "identification", a term already used to describe how a consumer of media puts themselves in the position of a character. There is already a lot of research into identification in books, movies etc, which could be instructive in translating the concept to larp. So I wonder if identification would be a better word for the narrow definition - I don't think it needs a new trendy term.
A few years back there was a lot of talk about "diegesis", "the magic circle", and a bunch of other terms borrowed from non-gaming fields. When I read some original sources for these terms it seemed like some of them had been a bit sloppily applied by some Nordic larp writers, and the original meanings might have been more useful. Can't remember the details though, sorry.What other terms have they adopted for the concept?