I like it. AD&D has always used a more abstract combat system assuming a character with 1 hit point is just as combat effective as one with 67 hps, but I think we agree that shouldn’t be the case. Diminishing returns should come into play the more you’re beat down over the course of one combat.
As long as the penalties are kept simple and easy enough to memorize and remember on the fly, as yours seem to do Slagathore, I think they could work in play. The key is implementing them and using them often enough so they become second nature.
If you use the optional combat fatigue rules, penalties for damage could easily be incorporated, or use it as a base system to model off of too.
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I like this idea. You could use a curve, the more damage taken the less effective you become until at a certain percentage of damage taken you become pretty much ineffective (for every percentage point of damage over 50% reduces the damage by 1%).
Or you could go with a tabular form and use a percentage range 50%-60%health = -25Śmage, 61%-80% = -50%, 81%-90% = -75%, 91%+ = no damage.