The new lifesteal seems to be tied specifically to damage dealt via "lacerations" (those things left by certain attacks, external bleeding, etc). The new lifesteal is perfectly fine in that regard, you can usually heal 2000 HP without even meaning to AND you can heal above your max HP. Just be sure to throw out External Bleeding every now and then, or use Act to detonate lacerations, and you should be good to go.

I've noticed the new life drain is rather quick at times, and don't know why exactly, but you can generally play around it. Lunatic doesn't need any buffs, you just gotta play em right and your opponent will be wishing for more nerfs.