I just played a game called
Nomic for the first time last week. It was enjoyable to jump through loopholes despite rambling, paragraph-long rules designed by other players specifically to avoid doing so, but I'd just as soon not recreate the experience for D&D. In Nomic, the core of the game is rules-lawyering. While I might do a bit of that in D&D, I'd much rather keep the story and action at center stage.
4E Cleave is fine. It's clean, it's elegant, it does it's job, and it does a
miserable job of exploiting the "weaknesses" like the one you presented.
And if this is your basis, 3E Cleave wasn't a very good rule, either. As it was written, you got a free attack when you "dropped" an opponent. This is the only situation in the PHB that the term "drop" is used, and thus it's up to a certain amount of interpretation. You could, for example, trip him, which drops him to the ground. Certain enemies don't really "stand," and therefore don't really "drop, either" -- the gelatinous cube, for example. The language is ultimately ambiguous.
Further, regardless of whether you include just "reducing an enemy to enemy to 0 or fewer hit points" as the definition of "dropping," it doesn't make any visual sense, either. If you're literally cleaving someone in half, why can they get up from a single Cure Light Wounds afterwards? Why does it work with bludgeoning weapons? Piercing weapons?
Does it work with weaponlike spells like Shocking Grasp? If yes, why should it need power attack?
Consider these questions, then consider "But what if I fill a bag of rats and put it next to the dragon?" Which of these is easier to resolve?