I like that you aren't really able to see the arrows until very last moment...it's very similar to my experience from RL when I've been shot at.
Dude however much I like wargames, firsthand stories of the real thing chill me to the bone.
Well, I still have M&B version .7xx saved on my computer with TLD on it -- so I can help you test it out, if you like.
High damage games are usually more exciting than low damage ones, so the gameplay over realism argument is misplaced. The only time you'd want a bit more health is to make single combat last longer, and there's not much of that in TLD.
If I may ask, what are you planning to do with the obviously unearthly items, like dragonscale, mithril, the blade of westernesse, or other armory items?