Here's some thoughts on the system you described:
I have a martial arts background and have done both empty hand and weapon sparring. This is what I am basing the following views on.
Now let's say you're fighting a Pict. You both have weapons. You are both striking and parrying, dodging and moving.
Now at one point, the Pict strikes high and leaves his ribs open. You stab at the ribs and connect, drawing blood.
That is an example of a standard attack.
Same example. Let's assume that you decide to go for a head shot. Now you're being picky. You're trying to hit a small, specific target rather than taking an opening. You are doing the work, feinting, set-ups, bluffs, etc. All trying to create an opening to the head.
And again, it's hard enough to hit someone on the torso let alone a specific part of the body.
Okay, now to your rules.
Increasing hit difficulty is the number one thing you have to do, for the reasons I stated above.
However reducing the damage, or making it a specific amount (smaller) does not make any sense at all. You strike to the head because it's a deadly shot. A strike to the eye is both crippling and potentially lethal.
You're not going to strike to the head to cause bleeding and to interfere with his vision. That's a secondary benefit. You strike to the head so you can cave in his temple or decapitate him completely.
And that brings out the single biggest problem with called shots:
They are
deadly.
No character wants their 15th level barbarian to get killed in a bar fight because the tavern wench got lucky and fractured his skull with a chair.
No GM wants their favorite BBEG to die in the first round of attacks because the Pict kicked him in the groin.
Yes, it's fun to shoot the dragon in the hollow of his left breast, in the one spot not encrusted with gems, taking him out with your heirloom black arrow.
But it sucks when it happens to you.
My advice is to dig up an old copy of MERPs (Middle Earth Role Playing) or Rolemaster. Show your players the critical hit charts. A first level hobbit can knock out a Nazgul with one shot if they get lucky enough.
Ask your players if they can handle a character being maimed or killed with a single shot.
Ask yourself if you can handle an important villain or npc being maimed or killed or even knocked out with a single shot.
If
EVERYONE answers yes, then go for it. Have fun and try not to slip on the entrails.
