I guess it comes down to this....IRL everyone knows that if you jump off a 20ft cliff you'll probably survive, but there's always a chance you'll land wrong and break a leg or crack your skull open. In-game everyone knows that you'll take a couple d6's of damage and walk away otherwise unscathed. I'd like my players to look at taking damage from their character's perspective rather than just as numbers on a page. I'd like for them to see themselves at half HP and think "I'm exhausted, tired, pretty cut up. I'm really hurting!" rather than "Cool, I'm good to go for another couple rounds, then I'll have the Cleric slap a Cure Serious on me." There are two ways to promote that viewpoint rules-wise. 1) The DM can make the rules support it by adding in all sorts of criticals tables with various injuries and disabilities to make jumping off a 20ft cliff more dangerous; or 2) The DM can just take the time to remind the players what damage really means to their characters every once in a while, and veto certain actions when the players start metagaming.
I prefer #2 because #1 complicates things too much for my taste, and often comes with its own set of metagame problems.
This isn't to say that I'm dead set against letting characters choose to do something heroic or macho if it fits the situation. The Dirty Harry example is a good one. I'd definitely allow something like that. OTOH, if an NPC offered a PC 20gp to stab himself with a dagger and the players response is "Sure, I can heal 1d4+2 damage overnight. Hand over the gold." that's obviously not playing the situation in character. Would Dirty Harry give himself a superficial stab wound to the leg for $20.00?