[THE FOLLOWING BELOW IS ONLY APPLICABLE TO MEGAGLEST]
But this really comes under new interface, wich we also have been around before, Megaglest REALLY needs a new UI.
You realize this is the GAE board right?
In my opinion, if such a feature were ever implemented, I'd rather see an option in the options menu for choosing between whether or not the health bar should appear, out of four settings: either always on, only on when a certain hotkey is pressed (toggle), or only on when the unit is selected. By default, it should be a hotkey, which defaults to off ingame. The always on feature would always show a tiny health bar, regardless of the unit and whether or not its selected. Hotkey would be the compromise, allowing you to toggle it on or off on the fly, keeping it off for those who don't want it at all, while being able to flick it on for, say, an epic battle, for those who want to sparingly use such a feature. Finally, only for selected units works the same way as the circles; only appearing when units are selected.
The circles would always be on, though, as the colours are necessary for determining the unit's alliance (friend or foe) as well as have crucial uses in the interface (how else do I know if the unit is selected? As well, if attacking a unit, the appearance of the red circle signifies that you correctly clicked the unit and they are indeed an enemy you want to be attacking).
Of course, I'm still unconvinced the feature would be of any reasonable priority (in other words, do everything else first, then come back to this).