iserith
Magic Wordsmith
It's not arbitrary that you could succeed at a cost (although whether or not that option actually comes up does seem to be entirely arbitrary). I don't think that's the real objection here, though. The part that seems to be in contention is the arbitrary selection as to the nature of the setback.
If you barely miss your attack, you could just miss, or you could hit and die in return, or you could hit and be disarmed or knocked prone, or you could hit but you break your potion, or you could hit and accidentally trip an ally. There's just no sense of causality between the action and the result of that action, so the outcome seems arbitrary. Especially if you "just attack" the orc, there's no way to reasonably line up any of those outcomes to correspond to such an abstract action.
A way that you could do it, and not seem quite as arbitrary, would be to ask the player to describe the attack in more detail. If the player describes a running leap at the orc, then a setback could be that you fall prone, and it wouldn't seem arbitrary since it's following from the narrative. Being disarmed would follow more naturally if you try to lunge past the orc's shield.
While nature of the setback could be arbitrary, I don't see that as a necessary outcome of the approach. At the very least, a DM is basing it on what makes sense in the context of the fictional situation. In the case of the example, the fighter and orc lock weapons and fight each other off - the fighter gets damage on a miss, the orc gets an attack as a reaction which may or may not hit. Other things might make more or less sense, but that's good enough even if it mathematically it's a raw deal for the fighter. (Though there is some dispute as to this, it seems.) There is also some causality there. Could it be better? Sure. But the broader point is that the approach isn't necessarily arbitrary.