I wouldn't go the route of converting wounds into fatigue. Four reasons:
PCs are KO'd by fatigue faster than they are by damage. With toughness 3, it takes 13 wounds to KO you, but only 7 fatigue to do so. Converting normal damage into fatigue doesn't make it "softer", it actually makes it more immediately debilitating.
Most NPCs don't actually take Fatigue anyway. Their fatigue is converted into damage, so converting damage into fatigue to make it non-lethal ends up in a weird paradox that ultimately only complicates things.
Normal wounds heal super-fast in Warhammer 3rd. An average human will recover from 3 to 6 wounds per day without any medical attention (just a good night's rest), which is roughly 25% to 50% of the number or wounds it takes to KO them. First Aid and Medicine checks can greatly improve this healing rate. If you're KO'd but not actually killed, you'll be fully healed in 3 or 4 days, even without medicine or magic.
Only Critical wounds count for determining if you die or not, and it takes several of them to do it. 4 total to kill an average human who's been KO'd. Most crits are caused by things the players can self-limit to one extent or another. (If you want to reduce the crits you're inflicting, simply use your comets for redundant successes and always spend boons on non-crit effects first.)
For my group, I made a Condition card called "Pulling Your Punches". It's voluntary, and only uses a Condition card so that we'd have a visual reminder of how it works. The card effect reads: "Add a Misfortune die to your attacks. Unless you roll a Chaos Star, your attacks do not cause criticals (including the one normally inflicted when a target is KO'd)."
I considered all sorts of ways to complicate that card further and make it more "realistic", but found this to be elegant and functional. Taking care not to kill your target should logically be harder than attacking normally, but not so hard that the PCs are always better off just killing everyone. Note that as written, the condition works equally as well for punches, pommel strikes, or even shooting someone in a non-vital area. Apply common sense as needed.