Okay, on page 150, Burning Wheel has a rather nice, simple set of Called Shots rules. But there seems to be too little reward - is the only benefit of Called Shots a reduction of armor dice?

Is it only worthwhile to try to chop someone's head off if they're armored - is going for a naked man's neck not worth it? Or is there some increased damage/other effect that's in some other part of the book that I can't find?

BW assumes that, if your opponent is unarmored, you will take your best shot at his neck when possible.

As a player, I only use Called Shots against armored opponents to reduce armor dice, just as this rule is intended to allow. Uncalled Shots against unarmored opponents will incapacitate them wherever I hit them, so I find Called Shots unnecessary. This works fine. I find Called Shots against unarmored opponents to be the hallmark of expert swordsmen who have the skill to show-off! Since the effect of the wound is the same no matter where I hit them, often we narrate where the blow falls as an embellishment.

To give Called Shots some credit however, there is a system being play-tested that has different effects against different locations. Some examples are: reduced movement for leg shots, +1 Obstacle to Hesitation when hit in the head, and a chance of dropping weapon from blows to the sword arm or hand.