I'm in on this.
We'll need flat-ish mountain ranges, savage regions and everything. Cold (not too extreme) situations make things more interesting, too. But zombie and skeleton infested evil regions might be a bit much. Might take a ton of fiddling with worldgen parameters.
I actually have one or two modding ideas to make this more interesting.
Turn caves visible on worldgen, make humans carnivores. That way, picking up the meat often strewn about caves is a valid source of food. In turn, towns shouldn't be very frequent.
Also, consider using the legendary lands mod to make things a little crazier. From my experience, LL seems to make random encounters while walking considerably more frequent. Also, horribly dangerous additional monsters one might need to dodge... and those freaking hordes of lions and/or wargs. >_>
I'd also suggest starting with a pocket map to begin with to check how 'doable' this is, and tweaking it before switching to the proposed standard-sized map.
I have a few questions about the rules, though:
Any rules on throw/ambush/swim skilling to get silly stats and/or using throw as retarded lethal weapon of doom?
Use a human adventurer with starting skills, or a play-now hero (this'd be crazy)? Any rules on starting skills? (From my experience, skilled/proficient shield/armor user makes one quite survivable...)
Also, I assume we use fast-travel to get to the south map square in question before walking up?
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Piecewise: Do you mean with actual punching, or is wrestling allowed? I've done the latter before. With small towns it's kinda doable, assuming you have good armor, legendary wrestling, trained ambushing, and keep camping house-entrances to get those pesky bowmen/crossbowmen to walk into wrestling range. There was a situation where I had chokeholds on a bowman and a guard, while kicking at a swordman. This is where wrestle-dodging actually gets annoying, as it keeps breaking your holds on stuff. Just hope the farking town leader isn't too much of a badass. Many of my save-scummed attempts on one town in question were foiled by a farking champion swordman. >_>
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EDIT: On that note, how about any rules involving followers?