Perhaps there could be more in-depth fire mechanics. As in certain horrors and creatures are averse to fire, so spilling some liquor on the ground and lighting it could be used as a repellant.
However in truth alcohol burns very quickly and does little more than minor damage if spread on skin. The health effects to a person from drinking are also minor in the short term, unless ingesting a very huge dose (which would cause you to vomit and maybe faint anyway, preventing you from causing real health damage). Dizziness and such would make you less skilled in combat at high doses, though many people are fully capable of effective violence when drunk.
The key thing would be the effect on sanity. Alcohol would help the mind deal with sanity, and maybe increase confusion resistance, but make one more susceptible to sleep attacks and reduce accuracy a little in combat. In the setting I would say that the more you use alcohol to avoid insanity the more you come to rely on it and become less sane whilst sober. Many things in the game would cause a sobering up from the sheer horror of them, and you'd have to hit the bottle often to keep your mind from shattering, whilst overall weakening your mind a bit more with every swig.