Steps to reproduce:
1. Open any project, set up collab
2. Create new script, publish it
3. Delete said script
4. In Collab dropdown select to Observe changes for deleted file
5. Editor will either do nothing(On Mac) or depending on external merge program it will try to open a non-existing file and external program will throw error

Expected outcome: Unity should internally tell the user file is deleted, so unable to open it
Actual outcome: Unpredictable outcome, based on what external program is used, either nothing will happen or program will catch error itself

Reproduced on 2017.1.0b10, 5.6.2f1, 5.5.4p1

Note: P4Merge doesn't work with 2017.1.0f1, doesn't launch at all, Error in console "The configured Diff/Merge tool is not supported. Check your Unity preferences."
Note: Picture attached is with 5.6.2f1 P4Merge
P4Merge Version 2017.1