I've intentionally left it vague. It's mostly video-game logic: you can bring a giant buster sword down on someone and bring their HP down to zero, but they're not dead, just "defeated", whatever that means. Making it explicit that he's murdering every single one of the enemies seemed like the wrong tone, and doesn't quite fit his character. To be clear though, Mezz isn't Spiderman/Batman, he's perfectly fine with killing (though you should probably picture it as a more cartoony killing, rather than him drenched in blood or something). It's just that he's somewhat of a stealth character, so he USUALLY favors knockouts; he sees killing as sloppy and unimpressive, but not off the table. You don't live your whole life in the ruined city and not kill. Even Scratch probably has a few notches (though I'm not definitively specifying there). But Diezel and Khazeem for example are 100% dead in the appropriate endings, and it's at least somewhat Mezz's fault.
Now, does all this mean that that bit of narration about "trimming the ranks" means he ended them all, or just crippled them for a while? Whichever you prefer, though I think my intention was more toward the latter; again, he prefers not to kill because it's sloppy, and doesn't fit as well with the "hero" identity/delusion he's crafted for himself. He is, like all good people, trying to live up to a somewhat unattainable ideal. But he's not unrealistically hard-line about it.
As for Dragon's Breath's potential for physical damage, the answer is that it's never been fully determined. Anyone who's not a hyena either ends up a sex slave (which tends to have a fairly...unimpressive career length) or ends up wandering off before training is complete and dying because their sex obsession and empty-headedness leads to the neglect of basic self-preservation: starving, tumbling off a high ledge, picking fights they shouldn't, etc. Anyone who IS a hyena goes crazy with violence and paranoia, and is murdered by other enterprising entrepreneurs before any physical signs of damage manifest. In the few cases where slaves/"Entertainment" have survived several years in their new roles however, no clear evidence of physical harm from the drug has manifested. But keep in mind that for "fresh meat" the drug is only used as an ensnarement and training tool for conditioning, then discontinued once the new assets are ready, so there's no continual abuse that might lead to further damage. Mahir only uses the clicker in the end.
ALSO: Was thinking over my comments on Mezz's name and realized I'm forgetting my own...lore? Dev lore? Originally I was going for a musical theme in naming for the first game, though I gave up on it pretty quick ("Diezel" is a brand of amplifier for example). "Mezz" is a reference to Mezzo, as in Mezzo Forte. "Medium". Get it? Cause he's short?