Nope, it's only on the weapon on which it's installed, PAX doesn't affect anything else.
It seem that gorilla arms (and maybe most of blunt weapons) have been slightly modified. Before it was "too" easy to kill enemies by mistake with "blunt" weapons (considered as blunt weapon) which normally have to be mainly "non-lethal".
But to be sure, take a powerful weapon (high dmg per hit, not DPS) like an Overture or Grad (Overwatch), ideally fully upgraded and deal a headshot on a random enemy. Normally, the head have to explode if you don't have any issue.
Or if you have Bloody Maria, you can also try with it (it increase the chances to dismembering enemies... I use it and I can say that arms, legs and heads fly everywhere^^)
Sucks that they got nerfed, cuz I really enjoyed making enemies' heads explode with a single punch.
Got in a fight and tested the Overwatch. No dismemberment, just a square, even when hitting the head and limbs. Used an Omaha to finish someone off and it gave me the blue diamond/knocked out crosshair.
Also, I tested to see if it was just my weapons that couldn't do it, and can confirm it was now. I stacked a few unconscious guys next to some CHOOH tanks and they got dismembered when they blew up, but when I tried shooting at some with a Carnage, they were still intact.
EDIT: Ran another save for a different character that also has gorilla arms. I guess making the arms non-lethal makes sense, but I still can't get the execution animation to play. Also, used Mox shotgun on someone, and it
also knocked someone out, at point blank.
EDIT 2: Tried with Bloody Maria. Managed to dismember a couple arms, and two guys were killed without any gore. Strangest part was one guy getting knocked out by the shotgun. Tried again with the same 5 guys. This time, two were knocked out, one dismembered, and two were killed intact, and short circuit was not equipped. Now, shooting them while knocked out
do show gore and dismemberment, but it seems to only work for this shotgun.