A number of ancient peoples used to wear war paint into battle (many American Indian tribes and the Celts). They also believed it granted them protection, and allowed them to conquer their fears in the face of an enemy. I really like this idea, and I definitely am interested in allowing this to affect S&W.
I think a good house rule would be that warriors who have prepared themselves with war paint gain a +1 to their Armor Class. This may be slightly magical in nature, due to the favor of the gods. Or it might just be that the war paint grants them enough confidence that they will take risks and fight better than they otherwise would have.