Wrestlers will punch as well as wrestle. Which means their only way of killing isn't neccesaraly strangling.
However a punch does only as much damage as a whip(at best) so even with highly skilled wrestlers have difficulty doing damage to highly skilled well armed opponents. Hitting the wrestlers would be like trying to hit a bee with a baseball bat, but offensively they are lacking. Eventually they'll get over exerted and fall to the ground where they will no longer be able to dodge.
If they are equipped with shields it seems diffrent though. If they have a shield equipped they will do nothing but shield bash, they won't actually wrestle (I think it still gives wrestling skill though). Shield bashes seem to be a bit more effective weapons than unarmed punching, but there are no actual damage figures anywhere for it. I think it may just take a dwarf's punching damage and add the usual materiel and quality modifier to it.
Actual wrestling is useless on most undead, and when they start using that kind of wrestling they don't want to stop, so giving a wrestler a shield is a good way to make them marginally useful against undead.
High skilled weapon users can counter attack also though. I'm not sure pure wrestlers can. Which can go a long way to making one dwarf able to decimate entire armies. They just need good armor and wrestling skill to back it up, because the enemy still gets the first swing, and if the swing actually does damage they cannot counterattack.
(P.S. All information presented here is from adventure mode experience and Dwarf Companion combat report logs from back when it worked fully.
EDIT: As for actually giving yer military some wrestling skill before arming them, I set them up to use whatever their final weapons are, then forbid all the weapons of that type before they grab them. After a half year to a year I reclaim the weapons, and the military will go grab them. You could even selectively reclaim the weapons to determine exactly what weapons they'll use. Some will have more wrestling skill than others, but you can assume they are all at least proficient wrestlers.