Really, I think my ideal damage mechanic would go like so :
Body rises by level and class as it does currently. Max body drops by 1 per time incapacitated, to a minimum of 0. A PC at 0 max body is unconscious until max body can be restored via either Surgery, Regeneration spells, or tag refresh. Surgery is an advanced version of the First Aid skill, which halts the death count if one is in progress and has a 10 minute sustained action (as opposed to First Aid's 2) that will bring an incapacitated PC back up to 1 body and restore 1 maximum body. Maximum body would be restored naturally to full via 'a day's rest' aka at tag refresh. Add 'Regenerate' as a high-level Earth spell and monster effect that would allow restoration of maximum body during game.
To go along with this much more deadly mechanic, I would make a slight modification to the armor rules. Armor would once again breach at 0, unless strengthened (per the blacksmithing rules for resisting shatter), or rendered. I would also add a new blacksmith-creatable armor ability called 'Fortification'. Fortified armor would provide a threshold of 1 per 15 points of the maximum armor value of the suit, rounded up. Therefore, a fighter at max starting armor with a 30 point tag would have a threshold of 3. Once that suit breached down to 29, it would reduce the threshold to 2, and to 1 at 15. Arcane Armor would not be eligible for this bonus unless it was attached to an armor rep of the suggested number of points that had been Fortified. Consider it a trade off for not having to wear a rep and getting free waylay protection. :mrgreen:
In this way, getting knocked down is much more of a concern, and physical armor better reflects the ability of plate to shrug off light blows without harm to the wearer. After all, it is exceedingly hard to hurt someone in heavy metal armor with a light swing. At the same time, even monsters and characters with low swing numbers can be effective via critical attacks, slays, and the plethora of magic and monster effects that increase damage. Also, the threshold never reaches 5, so the smallest direct damage spell, Stone Bolt, is never made irrelevant.
What do we think?