Don't you just love how the thumbnail for that first video is Haruhito in complete terror and pain? :D
Sadism jokes aside... Yeah, I could see that being a reasonable compromise overall. Let people from both ends of the spectrum be satisfied and gives some overall consistency to those who want it. I like it.

For that last bit... Just add a negative modified based on the severity of wounds, I guess?

That begs another question, though: to what degree will wounds be curable, and will players be able to "retire" characters if they're wounded to the point where they're alive and kicking, but not combat-worthy anymore?