Kinda seems like some extra dice rolls just for the sake of extra dice rolls, and would just muddy things up without adding much to the fun. Hit points are already abstract; the first ones you lose just represent fatigue and bumps and bruises, and the hit that knocks you to 0 being the serious injury. The "morale" roll is kinda already built in, with some race and class features allowing an automatic success, like the half-orc "Relentless Endurance."
Also, monsters and NPCs can already flee or surrender at any time, they don't need a hard-coded hit point trigger to do it. The DM shouldn't be running every enemy like it's on a suicide mission against the player characters.