well it depends, sometimes it is just silly not to include destructible character models:
Case in point being Soul Calibur 4 where these massive shiny swords seem to be as blunt as cardboard as they have no effect. Though Ninja Gaiden II was criticised for the supposed leprosy suffering enemies who's limbs fall off frequently, but have you seen the size of that Ryu's weapons like the glaive? that thing could be used for butchering whales!
I think if we have destructible environments then it would be foolish for us to ignore destructible NPCs. It makes perfect sense that if you fire a circular-saw blade from the G-gun at a zombie that it would be decapitated or bisected.
But as a matter of taste, regardless of scaring away players, they do seemed to get overwhelmed by gore they can't control, going into a kind of shock which isn't fun. I think gore in games is so much more accepted than in movies as the player has full control of it and only takes it as far as they want. Plus, people don't judge their own actions as much as film characters.