With high enchanting you can whack an extra 10 damage on gloves and on a ring at least. That and Daedric gives you about 40 damage, plus smithing? It's probably comparable to a 14 daedric waraxe * 1.5 skill * 2 armsman, but that can be doubled again by fortify enchants, and any smithing bonuses are going to get multiplied up as well whilst they'll just flat add to your gauntlet damage. Plus no enchants. So... powergame it and you're comparable to a non-smithing, non-enchanting 1hander. That must have been one of their testing builds so I imagine the game is doable, if hard.
Actually I tested this extensively...
The unarmed damage increase provided by the heavy armor perk is based of the BASE armor rating of the gauntlets, and is set sin stone. Increasing their armor rating through smithing and through increases in the heavy armor skill will not increase their damage at all. Test it and see.
P.S. Glad to see you in the Skyrim mod forums Talkie, brings me hope for the future!
P.P.S. A nice band-aid fix for unarmed play until the CK is released is if someone can mod both an invisible dagger and an invisibile shield. That way unarmed can scale (sort of) and utilize allot of perks.