@Swift
As stated, the level deduction does not normally get included as a quest failure penalty for anyone level 10 or below, so there is no realistic way to level down to below 0 by repeated failure. However, he accepted this quest with a level -2 penalty on failure presumably either at or before level 73 (his stated level as a warrior) and then had his level reset to 1 due to his legendary class change, a rare occurrence in and of itself. That coincidence sent his level into the negatives.
In order to reproduce this negative level condition one would have to uncover another legendary class change event (which are quite limited in number and normally very difficult to fulfil the conditions for), get the class in the process, and then also fail a quest they had already taken right after they drop to level 1. Without some really unfortunate circumstances this is unlikely to happen, as you wouldn't actually realize that your level can even go negative in the first place unless this exact situation had already happened to you, and people rarely fail quests on purpose.
With that said 20 stat points is really not much in the extreme long run. Certainly doesn't hurt to have a bit more stats but once you account for things like high-rarity equipment, titles, or other non-standard stat increasing mechanisms you wouldn't really even notice 20 extra points beyond level 300...