My opinion is that it would be a bad idea... in fact I've seen no game with such a feature, and I'd expect that there's a good reason for that - especially since it's such a popular suggestion.
I expect that not many people would love being severely punished throughout the game for a little yet irreversible mistake they did a long time back.
So I'd assume it would just force people to keep reloading after every single time they get a crippled limb, which would be nothing but annoying.
But well... so many people are asking for it so they might do it for once, even as an optional feature, and see if they're happy.
(in which case I would also suggest that it would only be available to select in the beginning of each game + there should be some way to prevent people to keep saving & loading right before and after a battle... maybe adopting a 'save location' kind of feature instead of allowing people to save at will? - terrible suggestions of course, but I could see no other way of making such an extreme feature work as it should)
I'm sure I still can't understand why so many people are so keen on seeing their character deteriorating through the course of the game instead of getting stronger.
(Aren't there any mods for that btw?)
Worked just fine in Fable 1 and 2, or in Black and White.
Doesn't have to be something that happens all the time - just on very big hits. Plus, there's a guy in Fallout 3 that lets you readjust your face - I could easily see an NPC that gives you some plastic surgery to remove any scars that you didn't want.