Hm. These guys are peculiar. I'd prefer every ten damage they take to give them a positive level.
But then you'd have to rework their saves at each power-drop.
I'd rather do something like -2 penalty on attack & damage when reduced to two-thirds hit points (or down to 4 hit points per HD?), -4 at one third hp (or 2hp/HD?) then fiddling with level losses.