While contaminant removal efficiency is considered when evaluating chemical wastewater treatment, this paradigm may be insufficient for medical-grade and high-purity water applications where biological safety (biocompatibility) is critical. As wastewater reuse expands into medically sensitive contexts, physicochemical indicators alone may fail to capture residual treatment-associated risks. This study presents a two-tier assessment integrating physicochemical performance (Tier 1) with direct biocompatibility evaluation (Tier 2) through in vitro cytotoxicity and endotoxin analysis. Mixed municipal–industrial wastewater treated using coagulation–flocculation (100 mg/L FeCl₃) followed by granular activated carbon adsorption (5 g/L) achieved high removal efficiencies (72.1% COD, 84.5% BOD₅, 84.6% TSS, 88.7% turbidity, and 62–80% heavy metals). Despite these efficiencies, full-strength effluent exposure reduced cell viability to 68.3 ± 5.1%, below the 70% ISO 10993-5 cytotoxicity threshold, and endotoxin levels (0.38 ± 0.06 EU/mL) exceeded dialysis-water benchmarks (0.25 EU/mL). A statistically significant negative correlation between residual dissolved iron and cell viability revealed a disconnect between removal efficiency and biological safety. These results support the Biocompatibility–Process Efficiency (BPE) integrated framework, demonstrating that optimization for high-purity reuse must balance contaminant removal with biologically relevant safety endpoints.