naw it doesnt sound crap at all, you have some valid points.
The oh crap, one dice roll and my head has been lost is a situation that is solved in many rpgs by giving the player grace points (usually called something thematic, in vampires masquerades its called willpower, in the battletech rpg edge). Everybody starts with 4, and each one allows the player to reroll any dodgy dice that has led to something lame happening. These are replenished by the gamesmaster when the player does something epic, or as each stage ends.
Also, the gamesmaster himself being the final arbitrator can override the dice rolls.
About the combat, i was thinking of an abstraction. Each creature could have a hit location table to it, which details the main parts of its body (Head, arms, torso, legs, hands and feet). Each of these locations would have a condition, not a hitpoint count. Something like bruised, cut, mangled, broken/useless and decapitated. Critical wonds could be simulated by simply having that on a particular roll a critical hit occurs, and that induces somekind of organ damage/knockout as we see in the game. We dont need particular descriptions for every injury as that can be played out by the gamesmaster. The overall condition of a character could be a bloodpoint system - being struck critical hits not only damage the condition of limbs but lower this - bleeding etc could be a lingering effect on these points, and when they reach a certain level toughness tests would be needed to be taken or unconciousness.
This system would be workable with appropriate tables for small numbers of combatants. For many npcs and non essential enemies, a basic Good, Fine, INjured and incapacitated system could be implemented that doesnt bother with individual wounds, instead relying on gamemaster narration.
This would make combat about the hits being deadly - rather than the you hit for 20 hp damage system we are trying to avoid.
In summary to make it clearer
For important characters:
Limb specific condition, that also counts critical hits using a table specific to its main body type (quadruped etc). these critical hits would simulate anything from mortal wounds to loss of a hand, and would be a permanant or lingering wound on the character sheet.
Bloodpoints - the condition of the character, can only be reduced by bleeding or critical hits. Limb specifics track everything else.
This also gives that legendary named giant cave spider even more deadly features - it would be harder to hit the same limb repeadtedly, just like in Dwarf Fortress, thus making it a harder opponent.
For minions:
4 level system thats further abstract, and more akin to something dnd but still striving for a df flavour. That means unconciousness and bleeding etc, but no specific lingering limb damage system, left to the gamesmaster to visualise and direct the npcs. This will be needed if say, 20 goblins jump the player.
While a program would be good to simulate this, needed to bring a laptop to every session would not really be feasible for many. However, this system is a good compromise. People have played sessions of battletech which has a much more complicated system using many more units than this
Anyhows one is off to bed, its 1:30 am christmas morning haha.
Ill check back soon! Hopefully have a brainstorm on this when the food kicks in tomorrow.