I work at a different scale, and my approach may be seen as "distasteful" by some, but here is what I have done.
I have taken infantry figures from my "extras" bin, with a minimal amount of painting (just a base coat that is fairly generic, and a bit of flesh tone for hand and face, and some brown for boots, and a heavy dark wash). I have crushed the figures down into prone positions with legs or arms askew. I have then glued them down onto small (very small) randomly-shaped plastic bases that I have painted red. I use clear plastic, a waste product from blister-packs that otherwise would be discarded. But you could always go out and buy some thin sheet styrene if you want.
In the rules I play I need to identify when a stand has taken casualties. But I do not need to identify which specific figure on the stand is out of service, nor do I need to identify, for example, that 2 out of 6 men are down (or 3 out of 12, or 8 out of 31). All I need to track is that this stand has taken casualties, and that stand has not.
So when a stand takes casualties, I drop a blooded prone figure onto the stand. They are small enough to fit into the open area on the stand. They tend to travel well with the stands because they are small and flat (so no tipping off), and there are figures and shrubs and stones around them on the stand to kind of help them stay put.
Then, when a stand is eliminated, I drop the casualty marker on the gameboard where they were. In my games I often make scenario-specific rules about making back lost victory points by getting medics to areas where casualties have fallen. This lets us track where and when that occurs. And, it adds a bit of "ugh" factor to the battlefield when a battle has been particularly hard on the infantry, rather than having the battlefield naturally clean itself up as the soldiers "evaporate" under fire.
Here you see the casualty markers in action during a game. In this case Soviet infantry is taking a bit of a beating as they try to cross a marsh under artillery and direct fire. Some of the infantry stands (squads) have taken casualty markers on the stands, indicating they are operating at reduced strength. Some have been eliminated, leaving their casualty markers behind on the board.
I use small brown puff balls for marking when a unit is pinned (first level of limitation). These kind of look like dust being kicked up by incoming fire. They stick to the bases well enough. I was trying to then use two puff balls to indication when a unit is suppressed (second level of limitation). But this was getting a bit too fiddly even for me, and also was harder to see on the game table. So I'm kind of stuck with the cut-out chits to mark suppression.
The casualty markers have worked pretty well for me. At least so far. Your mileage may vary.
-Mark
(aka: Mk 1)
