Currently, it seems that hand-to-hand is only practiced just to gain access to skills that has hand-to-hand as a prerequisite.
If a character has no damroll at all, fighting unarmed will do around 0-1 damage per round, even with hand-to-hand maxed.
How about something like hand-to-hand giving stats to 'unarmed' combat, something like a default 'standard' weapon that ranges from maybe 2d2 at 1%, and increases to 10d10 at 97%?