If you can control your actions and neither freeze up nor mindlessly try to escape a situation in an instinctive manner, then you have not panicked.
Obviously getting in a scary and life threatening situation is going to cause a stress response and cause adrenaline release and other physiological responses, but if the person retains the ability to reason and act in accordance with a logical thought process, then they didn’t panic.
In some situations a person may need to respond entirely instinctively and this might not be considered panic. Ever fall off a ladder?
If you somehow instinctively protect yourself and roll and use your arms and prepare yourself for impact these are neither thinking responses, nor a panic response. Unless you freeze and land on your head.
Anybody can get really scared and be subject to adrenaline release, but this is not necessarily panic.
Something that is very important to this discussion is that humans uses a number of types of learning, which are driven by different parts of their nervous systems. What you are describing with instinctive responses is likely a combination of reflex actions and over-learned motor programs. It's really important that both of those things operate in different areas of the nervous system than conscious thought. Reflexes, such as pulling back from a painful stimulus, often operate at a spinal cord level, and come built in for earth-bound survival. Motor programs are things we add through significant practice, and typically live more in cerebellum. An example of the difference is, indeed, falling and raising your arms. People in general will get their arms between themselves and the ground if possible in a fall (reflex action), but as a person who took hapkido for quite a while, I'd most likely aim to do a front fall with a slap (a learned motor program) instead of directly guarding with my arms . What would happen in this circumstance is a whole lot of practice causing a motor program to kick in, when there isn't time to think about the situation and choose a response. This is why it's so important to do a whole lot of physical practice of safety programs, in the actual circumstances, rather than just knowing what the safety procedures are. You want cerebellum to know how to save you without additional higher level guidance. Our reflex sets aren't so useful for diving, so we work pretty hard to create a good set of motor patterns to deal with frequent concerns.
However, the reason why I think it really matters to define panic as a set of physiological changes is because if it is defined as loss of cognitive control I think that sets people up for an extended session of panic. A central feature of treating Panic Disorder is teaching people about the physical changes that occur with panic, and that they are not inherently dangerous. You feel as if you are dying when you physiologically panic, but you just aren't really, and even while diving, you aren't dying *yet* just because you are out of cognitive control. If you continue to concentrate on your fear then you will become more and more cognitively out of control, and eventually that is likely to lead to seriously dangerous choices. However, the cycle of panic can be inhibited by acknowledging the effect it is having and allowing it to recede. Basically, the more you can accept and relax into the physiological changes the better your chance of calming enough to return to a place of cognitive control. The side benefit to this approach is that you can also let cerebellum bring to the table whatever motor programs you have been practicing for just this situation while you work on calming.
Mostly, I'm concerned that having too much of a - panic kills! mentality sets up a diver for an increasing panic feedback cycle when they realize they are feeling panicky. I'm really enthusiastic about the idea of resilience, and encouraging people to learn self calming to use in extreme situations. It's really amusing in a backwards kind of way - telling people panicking is dangerous will likely push them more towards fear, and increased danger, while giving them a sense of mastery in accepting it might allow them to calm. Its this crazy reversal we use to treat Panic Disorder- the treatment goal is to learn to live with panic, not to make it go away, but the side affect of being ok with panicking is people tend to stop doing it.
The difficulty of exporting this attitude to diving is the concern that some learners might take the advice to relax into panic and use it as an excuse to be cavalier about safety. However, I suspect those who aren't adequately respectful of safety have often tuned out by the time you get to that fine of a point.
AM