Despite its other problems, this was the one great strength of the Wounds/Vitality systems. It clearly separated hits into grazes/small cuts/plot armor and actual body wounds.
I always found that a lot of the "narrative" problems with hp went away with Wounds/Vitality. They were replaced by other problems, of course, like over-focus on Wounds, and increased swinginess in combat, if I remember correctly.
I like how FantasyCraft does Vitality and Wounds.
Here is what they are in FC:
Vitality - mixture of endurance, luck, and will to fight, measuring a character's ability to avoid injury. Losing Vitality does not mean actual physical damage but rather combat fatigue, as it gradually becomes more difficult for the character to avoid being hurt.
Wound Points - direct measure of a character's remaining vigor, measuring his ability to sustain injury. These are real, physical attacks. Your dead at -10 Wounds, but this can easily be changed for different types of games with campaign qualities.
Threats and Critical Hits in FC:
If you roll a natural roll in the threat range, you may spend 1 (or more Action Dice) to make it a critical.
1 Action Die - the attack goes straight to Wound Points or, if the the damage exceeds the target's Constitution score, he can
2 Action Die - inflict a critical injury, and roll on the Table of Ouch (a really cool table that inflicts actual injuries on a person).
This is what I like.
What helps player characters out in this game is that only Special Characters in the game can do Critical hits, unless a Standard character has the Treacherous npc quality. By splitting NPCs up according to type (Special and Standard), with standard being the most common, Player Characters will hardly ever be suffering those random critical hits by the minions in the game. Only those special NPCs that are the boss and BBEG's will get the honor to inflict critical hits, and therefore hits direct to wounds.