No, Rupture cannot cause a chain reaction.
I just finished testing this, here is the method that I used:
Purchase a weapon with a low damage spread (high minimum and low maximum damage). This is important to distinguish between damage caused by Cleave (which does 120% weapon damage) and damage caused by the Rupture explosion (which does 85% weapon damage). If there is too large of a spread, it becomes difficult to tell in the videos which one is which. In this case, Cleave did around 43-47 damage against skeletons and Rupture did 27-31 or so.
The weapon I purchased for this is called a Fleet Hulk:
Run around in the Cathedral for several hours trying to find the ideal group of enemies, taking video and analyzing it for places where Rupture should be spreading but isn't.
- Upload and annotate the video (Here it is!). If anyone sees anything in the video that makes my conclusion seem incorrect, please let me know and I will try running more tests.
I captured quite a few other segments where Rupture also didn't chain, but in those cases it seemed like there was some doubt since the enemies were a bit more scattered. This video seemed like the most conclusive test since the enemies (especially the group on the right) are quite closely grouped but still don't cause any additional Ruptures despite an enemy dying from Rupture damage right beside them.
Note: In case you're wondering how far 8 yards (the range for Rupture) is in the game, here is a handy image.
Edit: Apparently the annotations got messed up on the Youtube video, I'll try to post a new version when I get a chance.