The potential for creepy, crawling hands or making a ZHOAS makes this feature worth trying to save. DF's design philosophy isn't about giving up on awesome things just because they are impractical.
I think the real problem is that minor damage to your enemy doesn't occur if your weapon is softer than his surface material. Bending an iron sword over a bronze collosus' heads won't even scratch him. Wasn't part of the tissue layer re-write supposed to make it possible for minor wounds to accumulate until they could actually be a threat?
The other thing is, if the soul can be bonded to each part of a shattered creature like Jenova or Rah-Sep-Re-Tep (the creepy, immortal, undead guy from Wizardry 7), then we need a way of deciding that the broken pieces of an enemy are no longer a threat. It's implied that even if you grind him to dust and scatter his parts, Ra-Sep-Re-Tep will manage to reassemble himself eventually. However, once you shatter him into chips, the battle ends, and you can rob his house with relative impunity (the chest is trapped).
Maybe the undead's limbs need to be turned into crafts, before they can be truly defeated, but those crafts will always carry a part of that consciousness, and the undead's soul will haunt the various pieces, and try to gather them in one place, so that a one armed skeleton would wear the necklace made from his other arm, if he could find it. Items can have souls attatched to them right?