Usually in games letting players take someone captive, for example by tying someone up resulting in a restriction of control over his character would probably be considered bad game design.
Since we have permadeath (which also basically results in a loss of control over your character) and the fact that people usually play multiple characters, i think the situation here is different and the ability to for example tie someone up who is koed and then keep him hostage would be actually feasible.
This not only adds another choice in combat/player-player interaction (atm there is only kill/let live) but also adds an actual aftermath to battles apart from just rebuilding if you loose or looting if you win.
If you could abduct and imprison someone that is koed it would open up the option to ransom someone and should possibly result in interesting political interactions and bargaining as a result of pvp.
So in my head, someone who gets koed might be bound by a rope or by chains. That character basically could be dragged like cattle for example loosing a degree of control over his character but retaining some form of control within the boundaries of his shackles. So for example impaired movement within the range of your rope.
Also the character would be able to see and relay information if not blindfolded, and if blindfolded he might have a chance to to get rid of it.
To add some more spice, abducting someone would result in a "scent of abduction". Optionally this scent could be permanent in your invenotry, so only if picked up, and as long as the character is bound. Moving the character through doors, much like the visitor buff would spawn another scent of abduction, so if you want to get a village member back you should be able to find about his whearabouts if you invest the effort.
To make prisoners barganing Tokens also i suggest that once a character is bound, killing him should not be as easy as just using your weapon. By some obscure hearthling law, if you want to kill a prisoner, he should be properly executed. Lets say he has to be displayed for a certain ammount of time on a proper pillory and then executed by chopping block or hanging him at the gates. The head should be displayable somewhere on a spike. The time requirement should be enough to make a siege or rescue possible to happen, for example if negotiations have failed. Pillory and executions could also be utilized in village law enforcement.