"... it may lead pilots to conclude "well, as long as I'm a few feet away horizontally from people, I'm good" when in fact a UAS falling from a failure or accident almost never falls straight down."
This has been addressed in the "ARC Recommendations - Final Report - April 1, 2016". While not a proposed rulemaking yet, the committee's report says, in section 4.1:
"The ARC also considered what flight “over people” means. With the guidance of FAA staff in the room, the ARC came to understand that this term means flight of a UAS directly above one or more persons."
So today, i.e. right now, under Part 107 if you're not "directly above one or more persons," you're legal. Other parts of the ARC committee report recommend - again, not yet an FAA rule - that for all but the most risky flights a UAS should maintain 20 feet of clearance above peoples' heads and 10 feet of lateral clearance.