The block class has an instance_delete method, but this is not called when an instance is deleted. There is an obvious code bug in blocklib:

if(!$record = blocks_get_record($instance->blockid)) {
if(!$obj = block_instance($record->name, $instance)) {
// Return value ignored
$obj->instance_delete();

The two if statements should be if(), not if. I have fixed this on HEAD.