Well, that's a bit disappointing.
Any way to reverse the degrading effects so my dwarves can actually build some strength?
You can turn stat rusting off with a bit of modding. Add the following to the end of the Dwarf entry to turn stat rusting off:
[PHYS_ATT_RATES:STRENGTH:500:NONE:NONE:NONE]
[PHYS_ATT_RATES:AGILITY:500:NONE:NONE:NONE]
[PHYS_ATT_RATES:TOUGHNESS:500:NONE:NONE:NONE]
[PHYS_ATT_RATES:ENDURANCE:500:NONE:NONE:NONE]
[PHYS_ATT_RATES:DISEASE_RESISTANCE:500:NONE:NONE:NONE]
[PHYS_ATT_RATES:RECUPERATION:500:NONE:NONE:NONE]
[MENT_ATT_RATES:ANALYTICAL_ABILITY:500:NONE:NONE:NONE]
[MENT_ATT_RATES:CREATIVITY:500:NONE:NONE:NONE]
[MENT_ATT_RATES:EMPATHY:500:NONE:NONE:NONE]
[MENT_ATT_RATES:FOCUS:500:NONE:NONE:NONE]
[MENT_ATT_RATES:INTUITION:500:NONE:NONE:NONE]
[MENT_ATT_RATES:KINESTHETIC_SENSE:500:NONE:NONE:NONE]
[MENT_ATT_RATES:LINGUISTIC_ABILITY:500:NONE:NONE:NONE]
[MENT_ATT_RATES:MUSICALITY:500:NONE:NONE:NONE]
[MENT_ATT_RATES:PATIENCE:500:NONE:NONE:NONE]
[MENT_ATT_RATES:SOCIAL_AWARENESS:500:NONE:NONE:NONE]
[MENT_ATT_RATES:MEMORY:500:NONE:NONE:NONE]
[MENT_ATT_RATES:SPATIAL_SENSE:500:NONE:NONE:NONE]
[MENT_ATT_RATES:WILLPOWER:500:NONE:NONE:NONE]
I'm not sure what values would be sane for the actual rusting effect if you want it on-but-less. The default for the last 3 values are 2:3:2, except for DISEASE_RESISTANCE and RECUPERATION which don't change (and won't improve, even with this mod, as they have no linked skills). Higher numbers in those 3 slots make stat loss occur slower.