Grappling combat
I think you might be able to capture at least some flavor of realistic grappling with a relatively simple state machine. One state could consist of a minimal set of variables coarsely defining grips (e.g. no grip / opponent's arm / opponent's neck / holding a weapon), balance, momentum, stunned or not. Then a carefully considered set of possible actions available based on the state. I'd definitely recommend using double-blind selection for the actions, because combat is not "you go, I go". So both characters select an action, and transition to next state depends on both choices (plus character stats plus random if you like).
I agree that grip or hold is a big thing to the game. One thing that I have given up is to have it as a 2D with some board game like mechanic, the game would lose too much with such an abstraction and probably that is even what we do not want.
As for the turn based decomposition, that is exactly how it is mentioned (each player is to set his desired action and time scale-lenght of turn and than bhammm!!)
I'd base it on greco-roman wrestling.
since its turn based, you don't have to worry about drawing or transmitting packets in realtime.
you have positions: on my feet, on the ground but on top, on the ground on the bottom, on my stomach, on my back, etc.
you'd have moves: arm grab, leg grab, trip with leg, double arm grab (grapple or bearhug), throws, etc. different moves would be possible based on your position (can't do a throw when your on the bottom).
you'd also probably track something like who has who's limbs pinned. IE your on top and have my right arm pinned, so i cant do any right arm moves, until i succeed in an escape move for that arm.
moves would result in classic wrestling stuff: esacpes, takedowns, reversals, and pins. esacpes and pins would probably be tracked on a limb by limb basis.
obviously there would be no illegal moves. kick and punch would both be allowable moves. the goal would probably be to choke, kick or punch the opponent into unconsciousness.
and just like UFC, the kick or leg trip followed by the pin 2 legs followed by repeated punches to the head, and you've got your own little octagon simulator!
to maintain situational awareness, a 3rd person view would probably work better than first person.
if you want to get really serious about it you'd model special killzones, like kidney and windpipe and nosejam punches that can seriously injure or kill in a single blow. and don't forget the classic kick 'em in the balls!
