So some thoughts.
More damage means quicker fights.
This house rule is intended to replace damage dice scaling with by size with a size based damage modifier. We don't have all the details of that yet.
The optional rule for nonlethal damage on a missed attack (battle fatigue) would be so open to abuse. It would encourage things like rapid shot, two weapon fighting, monk flurry of misses etc because you'd be guaranteed some damage anyway and each attack would just wear the defender down. It might be fun to use that rule for single combat (like a showdown with a personal nemesis) and it would go both ways. I can imagine it for swashbucklers dueling or for a fight against a berserker who fights in a very exhausting manner to tire out his opponents. It would also make being tough important. More Constitution, Toughness, Diehard etc. This might help to counter the fact that the rules blatantly encourage paper tiger/glass cannon builds at the moment.
This would actually make mobs, gangs, and groups of unskilled foes fairly dangerous to mighty warriors. We might actually see heroes run away from swarms of low CR foes because "I just don't have the hit points to tackle 20 goblins right now!" This then goes into the problem of heroes hiring gangs of children or beggars to mob and overwhelm their opponents with nonlethal damage.
Speaking of which, with all this nonlethal damage people will get taken down more often and quicker too but they'll also go into negative hit points a lot less often because it would be the nonlethal damage that put them so low that one more hit pushed them over the brink and into unconsciousness. So quicker beat downs but a much higher survival rate. That starts to feel a bit like a cartoon.
One more thing. Adding BAB to damage means that equipment could get broken much quicker. Combat Manoeuvres like Sunder could become really powerful unless the hardness and hit points of all items were drastically overhauled.