[RPG] way to completely eliminate the penalties for Two-Weapon Fighting

Grappling and pinning an opponent makes it much easier to hit them; but, a grappled opponent is not considered helpless. You can not coup de grace an opponent who is grappled or pinned. (See the Condition Summary, DMG pp. 300-301). Note the penalties that each of these conditions apply:

Grappling: Engaged in wrestling or some other form of hand-to-hand struggle with one or more attackers. A grappling character can undertake only a limited number of actions. He does not threaten any squares, and loses his Dexterity bonus to AC (if any) against opponents he isn't grappling.

Pinned: Held immobile (but not helpless) in a grapple.

From the PHB (p. 153):

A helpless opponent is someone who is bound, sleeping, paralyzed, unconscious, or otherwise at your mercy.

If you're engaged in the grapple, or pinning an opponent, you can strike the opponent using a light weapon, or deal unarmed damage. Binding a character takes 1 minute (per the Use Rope skill, PHB p. 86); but, it would render the character helpless.

As a DM, I might override the rule and say that another character standing could maybe coup de grace a character pinned by an ally, depending on the circumstances. Strictly by the book, though, it's not allowed; the rules are quite explicit, on this point.

You could create a house rule: Spycraft has the concept of "mooks", who are the disposable, non-plot-critical NPCs that are often gunned down quickly in movie gunfights, or beat up in droves by kung fu masters. If you were trying to "neck snap" a mook-type NPC, the DM could opt to use the Spycraft rules.

When a mook takes damage, the mook gets a damage save against the number of points of damage taken. (I think it would use the character's Fortitude save bonus?) If the mook fails the save, the mook instantly dies (or is knocked unconscious). As the mook continues to survive and take damage the save DC is cumulative; so if the mook takes 12 damage, then 9 damage, his first save would be at DC 12, and his second save at DC 21.

Again, it would be up to the DM to decide if it's appropriate to borrow this rule.

There are rules for execution in Book of Vile Darkness (p.39):

The condemned must first be secured by being tied in place, pinned in a grapple, or successfully restrained in a stationary execution device. If restrained in an execution device, the condemned can make a[n] Escape Artist check every round.... If grappled, the condemned can attempt to break the grapple normally.

Once the victim is secure... The executioner makes a Profession (executioner) check against the DC given.... If the check is successful, the condemned is slain.... If the executioner fails, the execution is botched, and the executioner can make another check the following round.

For a Headsman's Axe, the Execution DC is 18, and a botched attempt results in a Coupe de Grace. Using this rule, it's possible to have one or more characters pin an opponent in a grapple, and have another PC perform the execution (using a headsman's axe). It's up to your DM whether he wants to allow this in his games... and whether he wants to allow other weapons to be used.

You cannot wear armor that is not sized for you

Most items are allowed to work when missized, and weapons work with a penalty, but no such rule exists for armor, and armor is referred to as having a particular, fixed size.

Armor spikes don’t necessarily have to be the same size as the armor they’re on

There simply isn’t a rule anywhere that says so.

At first glance, this seems absurd and an oversight, but I think a case can be made for “extra large” spikes. This is most notable in the case of armor made for half-giants and goliaths, as their Powerful Build means they are somewhere halfway between Medium and Large, and can use Large weapons without penalty though they wear Medium armor. For a goliath, it makes sense that they would wear Medium armor with Large armor spikes.

The handedness of armor spikes is undefined

Armor spikes are supposed to be Light weapons, do not get used in any hands, and at no point do the rules address over-large spikes directly. In theory, Large armor spikes on a Medium creature would now be one-handed weapons and thus eligible for wielding “in two hands,” but there is no way to actually use two hands while wielding them. Thus, I do not think it is possible to get the 1½ Str to damage or the 2:1 Power Attack ratio with this method. They do get the Str to damage and 1:1 ratio of a one-handed weapon, because that is what they are. The rules do not actually say that one-handed weapons get those while “wielded in one hand,” unlike the two-handed versions.

But you could take things a step further: Huge armor spikes on a Medium creature are two-handed weapons. As with one-handed weapons in one hand, two-handed weapons don’t actually specify that you only get the improved damage when wielding them in two hands, because that’s assumed. The text is “two-handed weapons and one-handed weapons wielded in two hands.” So in this case you would get improved Str to damage and Power Attack. And a −8 penalty to attack for wielding a ludicrously oversized weapon.

The armor still does not take up any hands, in any of these cases.

This really does not seem like the right way to go

You have a monster that’s given a higher CR than it probably deserves, against PCs nearly twice that CR in the first place. The sensible thing to do here would be to houserule them into something better, or at the least give them class levels (I recommend Fighter 6 with the Dungeoncrasher ACF from Dungeonscape, or else Crusader or Warblade). This particular collision of the rules is wonky, and still will not provide particularly effective combatants.