This thing has been doing the rounds for at least 30 years. What's the actual difference in the drill? Severe damage means you override and pull the fire handle. Which is actually reversible if really needed.
Think about it logically. The chances of both N1 and N2 dropping to zero because of an indication fault are extremely slim. If the engine was in fact operating normally there would be no yaw/roll effects.
I think it is unlikely that a genuine failure that rapidly results in N1 and N2 seizures will leave you in any doubt about whether to apply the failure or damage drill. The associated extra drag, rudder requirement, buffeting etc associated with the indications should all point to applying the severe damage procedure.