A ref should step in when a fighter is not intelligently defending himself. In other words, if they're too out of it to make proper defensive choices.
Fighters break their hands and feet in fights all the time and they continue fighting. How would you feel about a ref stopping a fight due to a broken hand? These are adult men who know the risks/rewards of their actions.
If a fighter gets choked out, KO'd, or stunned well enough, a ref should step in. If a fighter chooses not to tap, the ref should only step in once it's completely broken and considered a technical submission. Pretty much, the rules are fine how they are.