I'm beginning to suspect that in the setting, "peace" is actually a highly desirable material resource. I think the Peacekeeper's bullets may literally be made of leaded peace.
Exemplary. I cannot overstate my sheer delight in this. You've managed to take your entertaining RPG battle screen and build a competent, engrossing RPG around it. Well done!
One minor bug: Earning a damage medal before earning one of a lesser threshold gives only the higher level medal.