It's cool. I enjoying it. I like the intensity that being very, very mortal brings. Going into a combat knowing that a character may die is very different from knowing that they might lose an above average amount of resources.
I think that there a couple of things that I might consider if running a funnel.
I would probably give everyone 4hp +/- CON bonus. Having just 1 hp can lead you to be reluctant to risk anything. 3-4 hp means that there is a chance that the character might not die on the first hit.
I like the Lucky Rolls. They add a little something extra to the characters. Sometimes it fits the concept (like Bountiful Harvest for a Hunter), but sometimes its add an unusual twist (like Raised by Wolves for a Halfling Dyer) It would be nice if they could be built upon. Do they improve as the characters level?
Finally, and this one I kind of have mixed feelings about, I would consider allowing transferring one Stat from a character that dies to one of the survivors. I'm not looking to create a PC with straight bonuses, but it would be nice to be able to take the edge of some of the characters, as well as better align them to the class you hope to play. No very old school, I know.
thotd