Jedi Luke has a deflect ability that reads "after a ranged attack targeting you ... resolves, a hostile figure ... suffers 1 damage". What happens if the ranged attack kills Luke, does he still get to hand out the damage from deflect?

I'm of two minds on this one. Damage happens in step 7 of an attack, and the deflect happens in step 8. All the rulebook says is that a figure is defeated when it suffers damage equal to its health and that if it is defeated during its activation then the activation immediately ends. Does this also imply that if a figure is defeated during its action then the action immediately ends? Or do you complete the "after the attack resolves" timing from step 8 even if the figure is defeated in step 7?

Edit: I guess I should word that last sentence a bit differently. It seems obvious that you do in fact resolve step 8, since if for example the attacker had any resolve abilities they could certainly use them. I guess a better question would be does Luke still get to deflect even if he's not alive to do it? Common sense says that he shouldn't (at least to me), but by the RAW I can't see any reason not to let him deflect

He's removed from the board when defeated, so he doesn't exist and none of his abilities are in effect when you reach the "after the attack resolves" step.

The rules quote does not apply in this case. (It isn't Luke's activation, Luke is the target of the attack.)

DTDanix is correct. Jedi Luke would be removed from the map when being defeated during step 7 of the attack, so Deflect is no longer in play after the attack resolves.