Just reporting that I'm experiencing this behavior too.

As soon as a program tries to allocate much memory on the heap and the system 
starts swapping, everything freezes
and I can't do anything but power-down.

Specs: 8GB of RAM, Ubuntu 12.04 amd64, linux 3.2.0-20-generic, encrypted
swap and root fs.

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https://bugs.launchpad.net/bugs/159356

Title:
  System freeze on high memory usage

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