slang - Meaning and level of 死ねばいいのに

I have been hearing 死ねばいいのに twice last week, including once in a context where a bit of formality was required.

What does it mean? Is it as violent as it sounds to me?

I am not looking for a word-by-word translation. I think it has to be taken as a whole expression, a kind of idiom.

EDIT: I just found this usage example on HATENA::KEYWORD:

あいつ「練習なんでドタキャンしたんだよ」って聞いたら、「彼女がデートしようって突然言うからさぁ」だって。ははは。まったくあいつらしいや。死ねばいいのに。

Answer

Context:

Employee talking to the boss, jokingly.

As a joke, anything goes of course, but it does depend on many factors.

Boss: We received another request from our client: ...
Employee: またその話？死ねば良いのに。( -_-;;) Mata sono hanashi? Shineba ii no ni.
"Again? I wish they'd just go away/die! *groan*"

In this case I'd expect the two speakers to be on pretty good, colloquial terms with each other and have a mutual distaste for the client. If that wasn't the case, the employee should be reprimanded for insubordinate behavior (in any culture). It probably shows that he's really fed up with the client and probably doesn't mean it too seriously, but it's still not good taste.

Boss: Do you remember that guy? He's done it again! *lol*
Employee: あはは、死ねば良いのに！（笑） Ahaha, shineba ii no ni! *wara*
"Haha, he should simply die! *lol*"

If they were just bantering with each other I'd find it perfectly harmless, despite the fact that the employee would creep me out to some degree. It's not a nice thing to say in any language, but depending on the personality of the speaker it may be a simple joke or seriously worrying.

In any case, saying it to someone's face is never nice.

あいつ「練習なんでドタキャンしたんだよ」って聞いたら、「彼女がデートしようって突然言うからさぁ」だって。ははは。まったくあいつらしいや。死ねばいいのに。
"So I asked him why he canceled the practice in the last minute, and he said because his girlfriend suddenly asked him out on a date. Hahaha, those guys are just so... I wish they'd simply die."

Apparently this was used in a skit and was likely the punchline (as far as Japanese use punchlines). Here it's funny, exactly because it's rude and unexpected. If the phrase is used in this manner channeling a comedian, it's just good fun. The preceding まったくあいつらしいや and its delivery are quite important to set up this joke.

It's pretty much a case of 空気読めば分かる (depends on the context). ;-)