Stamina in HP Growth Calculation

I assume that by "state based" he means that for having a specific Stamina stat, your HP is increased statically by a certain amount, rather than your HP increasing more upon level-ups.

You are correct. To elaborate, I'll just paraphrase what BTB wrote about a similar mod for Morrowind:

State-Based Hit Points makes a small, but very important adjustment to how the game calculates your maximum health. Rather than being based on your Stamina at the time of leveling up, your maximum health gains per level will be applied retroactively based on your current Stamina values. In other words, your Stamina can be raised at your convenience for exactly the same effect as if you had rushed it, where previously it would have resulted in a much lower maximum health.

I was thinking something like (Stamina *  Level / 4). That'd give you about one third of maximum possible HP at level 99 with 128 Stamina. Of course the base HP curve would have to cap out at about 2/3 of maximum possbible HP.

A different method is to use Stamina as a modifier to base HP, for example (HP * (Stamina + 128) / 128) would double your base HP if you had 128 Stamina. Base HP could be easily calculated whenever needed by adding up the HP given each level plus your starting HP.

The only problem I see with implementing this is that HP has to be re-calculated every time your HP or Stamina would change. I think that can only happen on level up or equipment change, but it would have to include changing equipment in battle.
Luckily the percentage HP bonuses of Green Beret/Muscle Belt/etc. don't actually change your base HP, they are expressed as bit toggles on the top two bits of 16-bit HP, so that makes things easier to account for.