"How it would work in reality" is usually a questionable thing to try and duplicate in a game, because reality has a lot of things that make for poor and unfun gameplay. So going down that theoretical lane doesn't seem all that productive.

Even though adding in non-lethal/knockout weapons would actually benefit my hypothetical "thief" mod, they don't seem like they'd fit in D:OS's vanilla gameplay.

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I suspect that one reason why games tend to avoid "damage decreases a character's ability to fight" is that that can produce a death spiral, especially since enemies tend to both be more numerous and have 10-100 times more HP than player characters. That's the kind of mechanic that you have to balance the game around from the start, not add in 6 months after release to see what happens.