Quite brutal. It paints a pretty strong picture of the overall culture. I imagine a particularly paranoid ruler might get a little overzealous in defining what makes a criminal in order to be sure enough deaths occur. I wonder if these executions actually make a difference? The first success against the dragon was done through subterfuge but perhaps these executions have already been accounted for.
Count me among those intrigued. The core idea grabbed my attention right away. There are a lot of ways this can be developed and I am particularly fond of subs that get my wheels turning.
The second-to-last paragraph just confused me, though (not that that's a difficult task) and would probably be better replaced with more concrete examples added as idea scrolls.
I'd put it in the hands of a patron known and trusted by the players. Watch them try to figure out what's happening and how to fix it. In the course of figuring things out, they'd end up in some very sticky situations, such as when their patron decides that sacrificing them to a rival is the "easiest" way out of a longer conflict or when notifying them about some danger becomes too much work.
It seems that a lack of willpower would start a vicious cycle. Failing once might give the sovereign more trepidation the second time around, making it easier to fail. And so on. The reputation of the king would suffer publicly. I doubt such a ruler would last long on the throne with the strong-willed and power hungry about.
Of course, the reverse might also be true. A strong king, able to intimidate all law breakers would be perceived as unbreakable of spirit.