It sounds pretty similar to the VATS system from Fallout 3, but I think it could work.
The real question you have to ask yourself is whether or not it would wind up being fun. I've seen many design documents that sound awesome on paper but fail miserably in practice. It's my belief that the majority of them DO fail in practice and any designer who gets 1 out of 5 right the first time should be hailed as a genius.
If I were to hazard a guess, it would be that the gameplay would be initially enjoyable but would get repetitive after not too long. That's not a BAD thing, it just means that you need some way to add variety and spice to the game.
For starters, I want a reward for disarming foes and taking their weapon. Like a guy comes at me with a lead pipe, I grab his arm, punch him in the gut, and suddenly he's not paying so much attention to how hard he's holding onto his pipe. That's when his decreased grip could be represented by a percentage over the pipe.
I like BnM's idea about percentages, except that if you're going to pull them into the game, you need to go to a VATS-style system and allow players to freeze time and take as much as they need, or at least offer them enough that they won't run out very easily. Stopping to compare numbers will take the game in a different direction and may distract from the key focus, that being the raw combat.
Maybe it would just be so that, if I block his arm as he's swinging the pipe, I can punch him once in the face which will addle him, making it easy to yank the pipe from his hands, at which point it's MY pipe now and I can crush X number of skulls with it, or I can use the pointer to aim at an enemy at a distance and fling it straight into his face.
It will be hard to NOT bring some kind of interface cues into the game, which sucks because if you're going for a feeling of raw, unfettered combat, every additional piece of HUD or interface you involve makes the game less immersive.
It would be ideal if it could play like this:
1. Player "engages" an enemy. Game goes into bullet time. The player gets a first-person view of the enemy who is now moving incredibly slowly due to bullet time. The enemy is likely preparing to attack, such as winding up a punch, swinging a pipe, loading a musket, etc. It's up to the player to gauge what's about to happen and react accordingly.
2. Pick your actions. Choose a quick jab to the face, followed by a slug to the gut, finally grabbing his arm and flinging him into another enemy.
3. Watch it happen. Watch as your character will attempt to execute this combo: at this point, you're watching the results and you can push the dodge button to dodge incoming attacks as you expect them to happen, but also, the player MUST have a "bail out" button which disengages them from the encounter completely. If the fight appears to not be going their way because they attempted a combo that didn't work, they must be able to bail out with no penalty other than needing to start the encounter again. You cannot punish players for something they had no idea would work or not (at least not in early levels).
4. Players learn the rhythm of the game. Players will learn to more quickly gauge what kind of enemy they're facing (face armor, special clothing that denotes a particular fighting style, wielding a weapon, etc.) Reward players for speed by making them able to stop certain attacks from happening if they map out their combo and execute it quickly and efficiently, thus rewarding experience and skill.
5. Add variety. Fight fewer enemies where each enemy is unique instead of hordes of enemies where each is uniform and takes little damage, or maybe have segments of both, requiring players to disable an enemy first (like heatbutting them to stun in Madworld) then use them as a spinning weapon against a surrounding horde of enemies (again, Madworld). Make the boss fights involve figuring out the boss' pattern before really being able to damage them, like hit the knee first, then chest, then face, in that order, make it hard to avoid taking no damage from a failed encounter with the boss, but not impossible.
EDIT: 6. Waggle sucks. It only works in very certain instances that are few and far between. Most times, it fails completely as a game mechanic and should be avoided at all costs. Madworld does a pretty good job of keeping the waggle reasonable...until you get to those "shake both controllers until your fucking elbows cramp up" sections that I hate so much. Twisting tends to be fine, but the only game I've REALLY seen make waggle work properly was Godfather Wii, and it only worked because they had you use both the mote+chuk at the same time so they could check to see if what they THINK you want to do is REALLY what you wanted to do. Cursor use and tilt sensing are fine (provided you never have the player perform either one too quickly). It's gesture controls that seem horribly unreliable in most Wii games.
Honestly, I wouldn't give this project to any team except one with a seasoned veteran game designer at the helm who can decide how the details should drift when they don't all pan out into enjoyable gameplay. There's too much that can go wrong in the little details to risk it on anyone else.
Remember, being a game designer isn't at all about making awesome design documents. It's about how to shift your idea into something playable and fun when your original design document doesn't prove to be enjoyable.
Watch any amount of developer commentary and you'll hear plenty of "At first we tried...", "When we started out, we thought...", "We had to change...", etc. All that matters is that you start with a good core concept and work the details until they become enjoyable.