Actually, it works with resetting to 1 clientside, since the next time you get hit server will "give back" some hearts to you (since it tells you how many hearts you have). So it's no real problem, it only makes things look a bit weird for a client. Another solution could be to make the server packet all clients' health to them, like once each second or so...

Edit: Apparently there are tons of unreleased fixes for this. What a shame.