Locational damage is kind of a divisive topic here. Some people really like the idea, while others absolutely hate it. I myself have no strong preference one way or the other. I wouldn't mind seeing it worked in, but at the same time it would have to be done very carefully, and would probably require spread and range of archery and magic to be tied more to the skill level than we currently have, in order to keep skill level relevant for things other than damage.
I just RP that when the skill increase so does my accuracy. Ie when the sword or arrow takes more damage due to skill up, I just pretend that I make better hits even if the arrow is stuck in the leg of the corpse. And when doing high damage with melee I just pretend I hit his unarmormed spots.