There seem to be a couple of possibilities here.unless loss of hp actually does have a narrative effect (the DM describing the wounds from each attack), and there is no difference from the PC's perspective to guess how close they are to beating the creature, it has a significant detrimental effect to the players.
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So it seems like a paradox of sorts. HP are not just meat or fighting capability, but if you don't act like they are meat in the game, it has a negative affect to game play.
One is to follow Gygax's advice in his DMG, and narrate hp loss to non-PCs differently.
Another is this:
You don't have to have HP act like meat in order to narrate a decreasing amount of HP.
EDIT: I see I was ninja'd by @Shiroiken on the Gygaxian solution.
Also, when it comes to healing I'm with @Tony Vargas et al - the wound is still there, but it's bandaged, not bleeding etc and so doesn't impede performance.
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