Something which may tie into this: certain attacks (slashes with small weapons, or stabs/thrusts with more weapons) should have greatly increased accuracy against certain body parts, and be counted as very square hits, based on the distance from a part of the opponent you are currently holding (wrestling grapples, possibly use ubstep distance to determine accuracy benefit).
Just seems like it'd work. I mean, if you've got someone around the chest with one arm, it's not going to be difficult to slash their throat (or any other part close to the part of them that you can stabilize). Similarly, if you can grab someones forearm, it's going to be easier to slice a good chunk off of their lower arm or upper torso, or even remove the upper/lower arm entirely, since they loose the ability to really avoid attacks with those parts.
Iono. Thoughts that came up while I was reading the OP.
Oh, and more related, if this is implemented, the thing you are wielding and how well you are currently grappling the hostage should be considerations. If you've just barely snagged my kings shirt and are brandishing a bo staff I'm not going to be surrendering to you, no matter how little I like my king. If the weapon you wield is unlikely to do more than knock him unconscious, or if your attempt to harm the hostage is as likely or less to succeed than to free them entirely those factors need to be accounted for.