I was considering going this route with my homebrew. I'm not sure I will, but it led to some interesting questions. The only big issue it would cause is healing. I do not want my game to be too grim and gritty, where anyone can die from a lonely orc. I'd rather it be real swords & sorcery, where a pissed-off guy with a blade is the equal of ten guards and their necromancer boss.
The two options that occur to me would be to either make healing potions easily acquirable, or add something like the 4e second wind abilities, where you regain your hp at the end of each encounter. Both annoy me for various reasons. Too many healing potions is kind of silly, so I think that would be out. The second wind is kind of appropriate, but I feel I would need to add some kind of injury system to the game. Here's a quick one I'm thinking of:
Injury System: You recover all hit points at the end of each encounter. If you lose 90% of your hp in one encounter, you receive an injury. This injury will cause you to have a -1 to hit penalty until you can go to a healer of some kind and receive magical healing, or you take one month to recover naturally, during which you cannot adventure. Injuries stack, so if you continue on after receiving an injury in combat, and then defeat the necromancer, but get an injury during that fight, all your to hit rolls will be at -2 until you get magically healed or take a month off.