Case 1: Someone slashes a vibro-blade at the chest of a regular human in gym clothes, and the dude tries to block with his arm.
I think we can all agree that the blade will pass through the arm easily, as well as whatever is beneath that arm. If the chest/vital organs are in the path of the blade, I think it's safe to say that the regular human is dead and quite possibly chopped in half.
Using my system, a failed parry means the character is hit in the intended targeted location (likely in the main body). Damage is applied there, likely killing the character. So really no different than RAW.
Case 2: Same as above, but this time, only the forearm of the regular human is in the path of the blade.
I have no doubt that the hand/lower forearm gets severed, which would involve serious HP loss and bleeding at a minimum. However, what happens to the rest of the victim is unclear. Is the energy transferred into and through the flesh, causing massive trauma everywhere (like a high-velocity bullet can pulp tissue)? or is it simply a clean cut?
Using my system, the arm is likely severed clean. RAW does not address this scenario though. Either the attacker rolls a successful strike, or he misses. Should the strike be successful, the defender can either parry, dodge, or entangle. If successful, no damage is applied. If he fails, the strike hits and the squishy is likely killed (effectively as you described being transferred into and through the flesh causing massive trauma everywhere).
Case 3: Same as before, but now, the tip of the blade just grazes the skin.
If this was a regular SDC weapon, the victim would have a superficial cut (light SDC damage, nothing life-threatening). The outcome in this case is unclear to me. This could be ruled as an "effective miss" from the tie-goes-to-defender rule.
By the RAW, the least amount of damage a vibro blade can do is 1 MD. Most humans/squishies garner less than 100 HP and SDC combined. Even a graze or nick from a vibro thumb tack would instantly kill the average human regardless of where it hit on the body. By the book, KCs description might as well be official.
Thats why I like to inject common sense on the topic and assume the damage is applied to a body part. Of course if that graze was on the head or main body...the 1 MD is applied directly to that body part and the character is likely dead.
Somewhere out there one of the rules on parrying talked about parrying weapons with bare hands where the character would end up taking some sort of percentage of damage even with a successful parry. It was either Ninjas and Superspies or a Rifter FAQ. But I honestly cannot find it. But I find the idea of parrying the weapon itself retarded anyway. If you were going to parry a dude with a knife, you parry the forearm or hand, not the blade anyway.
But in reality, entangle and parry ends up taking damage as well in a real fight. Take your friend and give him a Sharpie in place of a knife. Now have him thrust at you and practice entangling and/or parrying. At the end of the session, check to see how many black dots and streaks are all over your arms and body. Now imagine that was a vibro blade doing a minimum of 1 MD for every dot/streak.