Saeviomagy
Adventurer
I think this entire thread highlights the perils of highly variable rules: Iserith made up some rules on the spot intended to hand out success with a consequence, and the rule made up is pretty bad - it has a high likelyhood of killing the player's character without them getting to have any input to the matter and almost never results in a net benefit to her or him.
Outside of combat, most rolls should build story NO MATTER THE RESULT. If you critically stuff up your diplomacy check, you make a powerful enemy. If you fail your jump check, someone has to fish you out of a pit. Usually you could choose not to try to jump that pit if you thought it was too dangerous. Given that, it's ok for those rules to be somewhat flexible, because no matter the outcome, the game is improved by it.
I think most of us would agree that an unspottable, unavoidable pit that has an even chance to instantly kill your character would not be fun, and that's sort of what the orc example is - outside of avoiding the combat entirely, you can't choose to not miss by 2 points, you can't choose to not give him the horrible trade on damage, and you can't choose for him to not attack you next round.
What's worse, is if the DM hasn't telegraphed that they are using this ruleset - that's the equivalent of being told that not only could you not spot the pit or avoid the pit, the DM explicitly stated to you that the hallway the pit is in was free of traps. You rolled a few times and he told you to stop rolling because there are no traps in the hall. And then you fell in a pit.
In short - put some consideration into free-forming combat if you are going to do it. Make sure that trades such as this are fair, not purely detrimental. Tell your players that this is the system you are going to use, and finally - and most importantly of all - let your players make choices.
Do all that, and I can see this as being a fun way to run combats.
Outside of combat, most rolls should build story NO MATTER THE RESULT. If you critically stuff up your diplomacy check, you make a powerful enemy. If you fail your jump check, someone has to fish you out of a pit. Usually you could choose not to try to jump that pit if you thought it was too dangerous. Given that, it's ok for those rules to be somewhat flexible, because no matter the outcome, the game is improved by it.
I think most of us would agree that an unspottable, unavoidable pit that has an even chance to instantly kill your character would not be fun, and that's sort of what the orc example is - outside of avoiding the combat entirely, you can't choose to not miss by 2 points, you can't choose to not give him the horrible trade on damage, and you can't choose for him to not attack you next round.
What's worse, is if the DM hasn't telegraphed that they are using this ruleset - that's the equivalent of being told that not only could you not spot the pit or avoid the pit, the DM explicitly stated to you that the hallway the pit is in was free of traps. You rolled a few times and he told you to stop rolling because there are no traps in the hall. And then you fell in a pit.
In short - put some consideration into free-forming combat if you are going to do it. Make sure that trades such as this are fair, not purely detrimental. Tell your players that this is the system you are going to use, and finally - and most importantly of all - let your players make choices.
Do all that, and I can see this as being a fun way to run combats.