That doesn't affect them at all, and they still die when they're outside that radius. And it's for enemy units only, I believe.... not converted ones.
Set healing to the opposite of the dammage and they should cancel out but you may get the annoying healing effect that obi wan has (same thing as standing near a bacta tank or imp repair station)
Have you tried the previously suggested idea of setting the Converted_To_Enemy_Die_Time_Seconds to -1? Just so you know, -1 is the normal infinite amount thing in the EaW xmls. You may need to do something with the converted to enemy clone things there are for infantry.