Aside from the people that take this thread as an attack on Smash's system, I think it's also kind of funny that about five different people have suggested the "at 100% you get double the knockback than at 0%" theory, with different wording, and each time as if they were the first to post it. The fact that it's so obviously wrong makes it slightly funnier.
I think the people that say that 100% is the average percentage to be KO'ed, at least in 64, are onto something. As stated, this is no longer the case because survivability has been increasing since then. I also think that the reason damage percentages haven't been normalized (i.e. so that in Brawl, you're still KO'd at 100% on average) because that would compromise damage granularity. In other words, the minimum damage you can sustain from anything is 1% (since, if you noticed, damage dealt by an attack is always an integer number, there's no hidden decimals), and since there are a much wider variety of attacks now, Brawl needs a finer granularity than 64.