[The Might]

radagastly, you make a very good point there as far as Elves are concerned, I must say I agree...
one folk that I would personally see using such a punishment are the Beornings and perhaps also the Woodmen.
The description of Beorn made in Hobbit presents him as a very good friend, but also as a very dangerous foe. And considering the fate suffered by the warg and the orc he caught, interogated, and afterwards quite painfully killed, I personally believe that the Beornings would make use of capital punishment.
Of course his reaction towards the warg and the orc is understandable due to his great hatred, however killing prisoners with so much cold blood hints that the laws in that area were quite strict and severe.
The Woodmen might use such laws as well. They were related to the Beornings and had common ancestors so perhaps their law systems also related. And also because they were not so developed they would, just as Southrons or Easterlings, be more likely to use such methods.