[Spaceman Spiff]

If it were me, I'd ignore the joker and deal a replacement card. I can't really see a good reason for calling it dead. You can expose a burn card, deal an extra turn card, etc., and it doesn't kill the hand. So I don't see what the big deal about just pulling a card out that obviously doesn't belong in the deck.

Like you though, I don't think it's an overly big deal calling it a dead hand either. Just not what I would have done in my game.