I can't stand the idea of "warrior-monks" who chose to fight without weapons.  It's not real world.  Cant your warrior monks use staffs, spears or pullarms, and use no armor and have purchased advanced skills in dodging or avoidance and staff combat, or something.  Punching and kicking just doesn't seem realistic to me. 

Last time I checked people weren't capable of pulling fire from thin air and throwing it at other people in the real world either, maybe we should just ditch the whole magic concept too

I wouldn't quite go that far. Fighting isn't just about two opponents standing across each other and wailing away with weapons and absorbing hits with armor. A fast mobile unit with a good ranged attack can easily stay out of the way of a plate-wearing greatsword wielding slugger that cannot keep up.

I've noted in one of Derek's posts that plate armor has particularly high defense against blunt-damage, for example, which is somewhat inaccurate. Historically speaking blunt weapons were particularly useful against heavily armored units since they could be disabled through direct physical trauma from blunt bashes against the armor - without having to actually pierce the armor. German swordmastery actually taught reverse grip sword fighting (holding the weapon by the blade to attack with the pommel) when facing heavy armor. Smaller piercing weapons like daggers were also more effective, since they could more easily be used to pierce into the joint portions of the armor.

As a rule I'd say the average guy without a weapon will lose to the average guy with a weapon; but specialized training goes a long way in this regard. In a fantastical setting I don't think it's too much to ask for to have the option for unarmed/or/and/unarmored specialists. Not everybody is a fan of eastern-inspired combat - I accept that - but it doesn't cost much to cater for those that are.

Well, in a fantasy world, it's hard to establish what is silly and what isn't. You can argue that fireball can be as silly as unarmed combat.

Fantasy genre is a hodge-podge of various mythologies - the taste usually varies greatly.

But when you look at those mythologies, you will find a lot of "silly" elements. In Mahabharata, the five brothers often used uprooted trees as weapons - how silly is that? Herakles often fought unarmed. Ilia Muromec from Russian "Byliny" was so strong that "each strike of his mace opened a wide street in enemy army", with soldiers flying everywhere. I have even read Mongol myth when a hero grabs his adversary by his waist, rises him above head, and smashes him against the ground so strongly that he ends up buried, with only head sticking out of the ground. A Korean hero, upon seeing enemy navy, jumped to the sea from a cliff, swam eight miles under water to approach undetected, and then emerged so forcefully that he smashed the enemy admiral's flagship to pieces, sinking it, and forcing the enemy ships to retreat. A Chinese hero Cao-cao allegedly fought bandits and killed ten thousands of them singlehandedly, armed only with a short iron pole.

Mythology is full of these stories - people all around the world like to exaggerate. Compared to this, warrior monks fighting barehanded do not seem so bad to me.

Of course, in real world medieval armies, bare-handed monks would be chopped to pieces - that's why no nation ever fielded bare-handed warriors. However, unarmed combat played a role in countries where the ruling class forbade weapons to control the populace (Japan).

We must decide, whether our game treads on the grounds of myths or some kind of sober parallel history. With games like WOM and FE, I think the case is clear.

I am game as long as we don't have the blandish palm of death attack. It's so overused I saw it in Fallout. Why not a dragon kick or some kind of fatality move? Let's think bigger here. 

I'm fine with this as a possibility as long as it is balanced compared to standard weapons, magic weapons, etc.

It would fit in fairly well with the way Elemental handles unit training. You could save money on the weapons but still give them combat training. Training Time should mean a bit more in FE as well since now opting to train that soldier will stop you building as well.

It'd be kinda silly to see them in the frontlines but it'd be pretty neat if it was a valid option for more miscellaneous unit types, ones with Pioneer Kits and the like.

We shall call them "gloves of transparency", or alternatively a weapon called "unarmed combat training". hehe

If tiger style ninjutsu is in (can't spoil anything with that), then I DEMAND Praying Mantis style. You can't basically have any cheesy movie/game without it. Don't forget the wise 160years old monks who can teach it in a week for a bowl of rice!

Seriously though. Unarmed combat as it is is ridiculous. You have no attack whatsoever? That makes no sense at all.