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Yes, the vagrant dies in The Craft, but the details in the summary are incorrect. He is not killed by a spell that makes him hallucinate rats. Instead, he is hit by a car (or truck) while harassing the girls on the street. The girls, annoyed by his presence (he is often described as holding a snake or being aggressive), collectively wish for him to stop, which results in the accident. The 'rats and vermin' hallucination mentioned is actually a spell Nancy inflicts on Sarah much later in the film.
Yes, the vagrant dies in The Craft.
The incident occurs when Nancy, fully embracing the dark side of their power, decides to test the limits of the coven's new abilities in public.
Specific Details:
The death of the vagrant is the major turning point in the film, confirming for Sarah how dangerous and malevolent Nancy and the other witches have become, and escalating the conflict between the two groups.
The AI took the method of torture used on Sarah (rats/vermin hallucinations) and applied it as the cause of death for the vagrant.
The vagrant dies because the girls 'wish' him away (telekinetic accident), not because he runs into traffic to escape a hallucination.