Tonight, one of my players began the session pretty drunk. That's not the problem I need help with; it hasn't happened before, and if it becomes a thing then I can deal with that. But I continued with the session anyway, hoping it wouldn't turn out too bad.
Predictably, it turned out pretty bad. His character is normally very reserved and conservative, and is essentially the party's moral center. Since he was drunk (much drunker than I first thought), he played the character completely against the character's personality and coup de graced an unconscious opponent from a friendly duel. Said opponent was being tended to by a paladin who retaliated and critted the PC, killing the character and bringing the session to a record-scratching halt.
Now, I feel that in-character actions should have in-character consequences, but my problem is that these weren't in-character actions. So I'm torn on how to handle this from the standpoint of immersion: to me, even acknowledging that this session happened damages immersion because it acknowledges that the character became a totally different person for no reason.
On the other hand, retconning even a 3-4 hour session without much plot development feels like it poses a much bigger threat to immersion, not because it would set a precedent, but because I could see it destroying the illusion that we're actually participating in a story as it unfolds, rather than selectively writing it as we sit around a table with dice and pencils.
What I'm Asking
My question is specifically about this case, but I would like some rationale that I can use to grow as a GM. How far can I go in retconning a session, and how far should I go to maintain immersion? What are some techniques for elegantly "rewriting history" in cases such as this? If you think I needn't retcon at all then I'm interested to hear why, but do keep in mind that I feel the player just made an honest mistake, so I'd rather avoid punishing him for what I feel is a one-time thing.
What I'm Not Asking
While I believe my handling of the situation during the session could be more closely analyzed (specifically allowing the session to go on, and having the NPC paladin react the way she did), this question is purely about changing something after the fact.
And I acknowledge that roleplaying is a hobby that thrives on communication and cooperation, but an answer that solely focuses on hashing it out with the players and seeing what they think wouldn't be terribly constructive for me; I'll of course be seeing what the players think, and I could see different players having different levels of tolerance for this kind of thing, but I'd like a perspective from outside our inexperienced group.