Yeah when I read the patch notes on this my first thought was, 'Who thought this was the best way to implement this?" I use zone chat to look for upcoming battles and calls for help and the kill feed seems like it will completely overwhelm it, especially in large battles. I'm reserving judgment until I get a chance to see it in action though.
I have a tab I'm usually on that turns off zone and just get guild and group chat along with combat numbers. The new kill feed is only on the default tab so I just leave it in the background.
ZOS treats the PTS as testing for show stopping bugs before they hit Live (like if the Kill Feed crashed the game) or making minor tweaks to numbers in a formula (like change some buff from 12% to 10%). Something that is annoying but not game-breaking will never get priority on PTS. It just won't. That is not how ZOS use the PTS. Their goal is to use PTS to find the stuff that:
1). Absolutely, positively must be changed before it goes Live because it breaks the game.
2). Stuff that is not game-breaking, but simple and low risk to tweak before Live.
It is kind of funny in a sad sort of way sitting at Ash and watching the steady stream of names of DC players dying at Ash milegate while they get farmed by some ball group, but chat is a really bad place for this info to be sent. Maybe if they added the ability to bind its toggle to a key so you can quickly turn it on and off as needed it would be ok, but as it stands right now it's not useful if you actually want to watch zone chat.