What do you want to matter in your game?
If you want tactics, maneuvering around, combatants testing enemy defenses, you want a lot of hit points. (snip)
Thats a good point about the issue of Time focus or bullet time ala "The Matrix", this is another thing you can play with in a combat system. If you ever watched a Kirasawa Samurai flick, most of the (very realistic) fights are resolved extremely quickly, but a lot is actually happening there. This is what a real sword fight is like with unarmored opponents, with armor it will last a little longer of course but we are still typically talking minutes not hours!!!
But I think your two versions of how to do combat are somewhat of a false dichotomy, these are two variations on how to do it, but certainly not the only two. We gamers tend to approach these kinds of issues from a binary / dialectical mindset, it's wise to remember one can always look at it another way. You can actually limit hit points and still have all kinds of maneuvers and testing enemy defenses etc.
I think for DnD we obviously want PC's to have a decent chance of survival, but we also want fights to be interesting. When combat really sucks is when it's slow, tedious, and the players have few options (like that scenario somebody mentioned of the two all defensive fighters who needed 18 to hit each other). I think we have all sat through combats like that in DnD.
If you give the PC's (and NPCs) the ability to allocate their dice freely to attack, defense, saving throws, damage whatever, effectively people can fight cautiously, in which case fights will last longer,
or more aggressively, in which case they will be more decisive. And whenever a fight isn't balanced, (one side outnumbers the other) fights can get very dicey, because if you don't have to worry too much about your defense (due to your opponent being distracted) you can concentrate all your dice on a lethal attack. These situations (people being ganged up on) can change fluidly and allow for yet another layer of tactical options for players.
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In Torg, damage is split into "shock points" and "wounds", and conditions "Knockdown" "K" and "O". A lucky hit can kill most characters, but you can spend a possibility to reduce the damage after the effect - you have to decide what exactly you reduce - wounds, shock points, Ks or Os.
This sounds like a good system, if a little complex. Like I said, I think if you limit the hit points to reasonable level (one or two times their Con score) you can still have fairly interesting, realistic combat. With the Codex what we do for KO is if you score a critical hit with a blunt instrument, you roll the extra damage as a KO threat instead of more damage. (Many bludgeoning wepaons do a little more regular damage to compensate for this)
So for example if you get a critical hit with a mace, roll 7 regular damage, then roll an 8 for your crit "damage", this instead is combined into a KO threat of 15, which is the DC for the targets Fort save against being knocked out. Alternately you can have it cause cumulative non-lethal damage. This way say a Sap can actually function as a weapon, rather than a mere adornment on the equipment list that nobody actually ever uses.
In the Codex mooks will typically have no Martial Pool (only one dice to play with) so they can't control their luck like PC's can, and it's much easier to get them, but they can still get lucky so you can never completely write them off, which is better than having completely harmless mooks which are boring IMO.
Another way to keep players alive (besides armor) is for them to arm themselves with good defensive weapons. In the Codex a shield always gives you a 'free' dice on Active Defense. A staff has a very good defense bonus which applies to your Active Defense rolls. So a character who is a wizard with a low Str but a decent Dex can at least defend themselves pretty well with a staff.
What I learned from many years of martial arts, and a certain amonut of semi-recreational fighting in bars and etc., is that real fights are usually interesting, at least to the people involved, even if they are short. A relatively even fight is often very dramatic if you look at what is really going on. This is what I wanted to bring into RPGs.
G.