There's a lot more to the co-worker's story than what you've told us (or most likely have heard yourself.) There's no jurisdiction in the country where shooting someone that's invaded your home and is attacking you with a knife will earn you a prison sentence.
And you're right - a knife is a "deadly weapon" anywhere as well. You're not escalating or using disproportionate force when you respond with a gun.
I'll see if I can find a court ruling, but the problem is that the issue probably hasn't been heard by the Supreme Court because there's really no question or debate in the matter.
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