What's that example meant to prove?
Penumbra went with a "screen pulses with red heartbeat faster and faster the more wounded you are," and the end result was that it was really annoying. In the demo you take a fall as part of th story, and spend the next 20-30 minutes with a heartbeat sound and a red pulsing across the screen. That's not really an improvement over a little unobtrusive bar somewhere that pops up when you're wounded, IMO.
Having no health system at all is an improvement over 'having a little health bar pop up when you're 'wounded''
What the hell does 'wounded' mean in this case anyway?
We've had this discussion before, 9 times out of 10, if you're hit anywhere with an arrow, it's mission over, you're never going to carry on, and if it's only a scratch then it's not worth mentioning anyway.
This idea of minor wounds gradually adding up to 100, and when you get the final small scratch which takes you from 99 to 100 damage, it means you're dead, makes me laugh.
Either have a body awareness system for the player avatar where you can tell exactly where on your body you were hit and what kind of wound it is, or just have the player killed in one hit. It's not as if he's wearing any armour anyway.
This idea of generic hits and generic damage and generic instant recovery is an irritating and pointless nonsense, and I don't know how you can have anything but contempt for it.
Once you have this complete body awareness system, then you can start to implement some adverse affects depending on the position and severity of damage, and introduce some ways of repairing specific types of damage in a more realistic manner.
I know, I know 'but people will just keep saving and reload if they have to suffer any adverse effects from damage, blah blah etc'
This is yet another reason why it's necessary to have at least limited saves or auto save points, or better still, no saves at all.
Any decent health system you can think of, which has actual consequences for being a stupid and useless enough player to get damaged, requires a limited save system of some kind, since, in a recent study, approx 99% of gamers were found to be worthless cheating scum who'd sooner fool themselves into thinking that they're great than face any consequences of their inadequate skills.