Will work this way

Opponent declares attackers then declares which zone

During the action window, I play Steel's bane targeting one of my units in the zone.

Does he then have to assign enough damage to kill it, which thanks to the Bane will be over 10 or can he just apply the amount of its HP and the rest to the capital. I was just thinking in terms of Toughness. If I block with a 1 toughness unit and he's doing 3 damage, 2 of that has to go to the unit before the 1 can carry over. This seems to be the way Steel's bane should work too.

If you play it before damage is assigned then yes, they have to assign enough to kill it before they can put damage on the capital.

So as long as you have a blocker this is kind of like an added "fog" effect. Might help against the rush as long as opponent doesn't have a seduced. I have your decklist for the Orc/skaven rush deck and am taking on your challenge to find something that will beat it >50% of the time. I'm having a rough time at it lol. Even if I can manage to slow the initial, when you're able to draw 4 + cards each turn, you can't stop that. White weenie decks in magic always stalled out after the initial rush because they ran out of cards but this game is different since you can draw more obviously.

This doesn't help stop the rush decks as you normally won't have a blocker. These decks typically attack away from blockers, or through a hole created by lobber crew, seduced, deathmaster, we need your blood, easy pickings, chillwind, etc. And if your running high elf units in your deck you've probably already lost. High elves currently have 0 competitive deck types.

If you want to beat orc/skaven anywhere close to 50% of the time with order right now run dwarf aggro or bolt thrower. Maybe empire when the the derricksburg battlepack comes out, pending testing of course.

Streamlining a corruption deck that can at least beat the rush. by corrupting en masse and/or using brutal offering to kill battlefield units. Still doing more testing but so far so good. Will post results with turn by turns in a couple days.