Just tried it with 7+6cp Wounds and 7+5cp Nightmares, and yes, it seems to be enough loss to bring them from anything below 8 down to 0 (assuming it's at least 36 CP loss, and not just setting to 0 directly, because it said "You've lost a quality" and not "Your Wounds is gone!"). Also noticed that the Ruthless message was "has not changed from 10 because it's higher than 9", meaning it goes up to 10, not up to 9.