Choice of system

If you're interested in realistic simulation of physics, Storyteller is not your system. There are awesome systems out there that take into effect armor degradation, hit location, and more. Storyteller states up front that they opt for simplicity and ease of play over realism. That's why they named the system Storyteller. They have the design philosophy of story over realism.

I would say that there's no more explanation necessary. This is the compromise they made to keep things simple and keep combat moving.

If you want realism, you might want to check out this question: Which roleplaying games feature realistic combat?Which roleplaying games feature realistic combat?. House Rules

Storyteller also explicitly says (and I'm big on this philosophy in general) that the rules are there to support your style of play, not the other way around. This means that anything that you an your players agree on is more than acceptable rules wise.

My preference on house rules is simple: try it out for a couple sessions. If it doesn't work, revisit it. If it does, keep it. Meta-gaming

General Statement: anything that increases lethality favors the PCs. Conversely anything that decreases lethality favors the bad guys.

This sounds wrong, but is generally true. The PCs are typically more powerful than the NPCs. That's why they win most encounters. Individual PCs may die more often if the lethality is increased (due to, say, a lucky shot by an NPC) but the party will, in general, win encounters faster and easier.

I'm not saying you shouldn't do this, just that you should be aware of some of the consequences of making your game a tad less lethal.