Wow, quite a thread... Interesting too. I have to admit I skipped some of the middle, pardon if I am rehashing anything.
I see both sides of this, Grumpy's and others. He's invested a good bit in this skill and he should expect it to pay off in some fashion. I also agree that a DM is in control of his table. The DM's power does come with responsibility though. He has a responsibility to see to it that Grumpy's character is fun and reasonably balanced so that the other players have fun too. But consider this, if Gumph sat down at the table with a tricked out ranger that ginsued the BBEG in 2 rounds every other encounter and went by the rules of the table he wouldn't gimp the character just because it was likely to outdamage the whole rest of the party.
So Gumph is entitled to get his bennies by the rules and the DM is entitled to make those rules work properly. In this case the DM has 2 large areas of leeway, setting the DC and determining the result. So it shouldn't be a big problem if everyone keeps clear about how it is going to work.
Thus I would sit down ahead of time with Gumph and we would just work out some ground rules. First of all it is clear to me (sorry Nail) that the PLAYER is entitled to specify which of the outcomes he is attempting to get. Just like he would be entitled to tell the DM what outcome he is wanting if he used an Athletics stunt. "I want to try to make the hobgoblin surrender". The DM, just like with any "page 42" type action will decide how that plays out. Success may or may not get the exactly desired results, but the results should be consistent with the players stated goals.
For example the hobgoblin is successfully intimidated and because it has an escape route and knows there are other hobgoblins nearby that could help it, it runs away screaming, goes to the next encounter, and sends reinforcements. The encounter could get a LOT harder all of a sudden! This isn't something the DM should connive to do, but when it best fits the situation it should be fine, just like a character leaping onto a platform might find out too late that even though he made his athletics check the platform is rickety and collapses and sends him plunging into a pit. Usually things will work out mostly to the player's advantage in the natural course of things.
Now, the real nut of the question we would be needing to work out would be what are a fair set of DCs? We already have the basic mechanism in place. Intimidate vs Will +10, and often +15. In the interests of fairness I would codify some of the other possible DM applied modifiers and do it with the player so they understand my reasoning and why they are certain values.
+5 Unbloodied Elite boss monster is present - you don't want to piss off the boss man. monsters will always fight harder when the boss is right behind them.
+10 Unbloodied Solo boss monster is present - And that goes double for the big boss who gets to decide to kill you for being a coward.
(note that these also apply to the bosses themselves, BBEGs rarely surrender etc)
+2 for each bloodied PC - Monsters are not going to surrender when they're winning.
+5 for each totally incapacitated PC - Ditto
+5 if the monsters outnumber the PCs by 5 or more
On the flip side each of these can become a minus for the inverse situation. Dead bosses etc will reduce the monsters morale and make them surrender more easily.
Other special bonuses will be approximately as follows:
Monster is "mindless" and just follows orders, thus has no sense of self preservation at all. Immune to intimidation. You simply cannot intimidate a zombie. It has no fear and can't be threatened because it doesn't value its own unlife. This is rare, but could also apply to at least some constructs etc. as well.
+5 monster is exceptionally fearless or reckless by nature. Red dragons fighting in their lairs, demons, monster which cannot be permanently killed (lich for example).
+2 monster is known for exceptionally high morale and dedication. Usually these are high will as well, but again there are some monsters that are "fanatical" and only give up very grudgingly.
+2 Party is known to kill prisoners and the monster cannot simply flee. Monsters want to live, and surrendering is worthless if it has no reward.
-2 monster is not fighting for any good reasons or cause it cares about. Intelligent monsters are no more likely to throw away their lives for nothing than anyone else.
-5 monster is basically not aggressive or did not want to fight in the first place. There could be situations where a monster is simply cornered and attacked but would not normally have a reason or desire to fight at all. It is simply defending itself and will thus probably surrender if the chance comes up.
Notes on results of Intimidation: Most monsters will generally attempt to flee. In general they will try to act in their own best interests and intimidating them with the surrender option successfully will generally make them believe their cause is lost. They may also surrender entirely if flight is too risky or impossible and they believe they can survive by ceasing to fight. Cowing a monster in battle will cause it to back off or switch targets depending on the situation. It may also be used to demand a parley. The results of a parley will depend on circumstances. Some monsters may offer to allow the party to pass either for a fee or even pay a tribute depending on relative strengths of each side and story considerations. In DM determined situations the monsters may even be willing to switch sides. Such allies will almost always prove to be highly unreliable may well be treacherous.
I think this covers most situations reasonably well. The various modifiers may need to be different, this is certainly not tested (yet). But it should both prevent silly results and at the same time make intimidation potentially quite useful.
