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If I have 1 damage remaining before a character is KO'd, will Lucky Dodge always work because it can only take 1 damage?

No. A character takes whatever attack damage is applied to it, regardless of how much damage remains to KO the character. Lucky Dodge works on the attack damage being applied to the character, not the actual damage needed to KO them.
Source: Aequitas (2020-09-14)    【Link to Ruling】
Tags: Lucky Dodge