[...] good parenting is in a steady decline. Fact.
It is "in decline" from at least Ancient age. First text about how "everything new generation does is wrong, they've forgotten lessons of ancestors, blah blah, the sky is falling" is more than a two thousand years old. I forgot where did it came from, Ancient Greece, Rome or even Egypt.
When I was a kid, I played Dangerous Dave. A lot. Later — Doom and Mortal Kombat. I don't believe that digital blood have *any* effect on children's psychic development. It is way easier to blame bloody games and TV (which is usually way more violent than games, because it is more realistic) in troubles of someone's child, than to be a good parent. And a good parent ≠ parent who forbids to play games with excessive amount of red pixels on screen.
On main topic: desaturation with some blurry shaders and probably bloody red glow at the edges of the screen is better than "blood splats in camera". It is more immersive: ask someone to splash you with a bucket of water in the face — you won't see drops of water on your "screen", it all will be blurry. Concussion (which I never experienced myself, and don't advise to anyone), as people have told me, is basically disorientation and blurring — again, no blood splashes here.