One idea i had (untill we get flower of battle):

when you have 2 lines of people face off, NOTE; assuming hallways or some other reason to be cramped (like one side making an effort to stay together, the videos on ARMA site show that normally in skirmish level fights many little fights often happen, and shield walls are harder to form, so this idea wouldn't apply to most small skirmishes)
I tried to find the link to the videos but couldn't find it.

to get initiative do this
all people on both side drop initiative
all reds declare targets
If this is happening after the lines are both next to each other: any white with no red declaring him as a target may take a second initiatve drop, so they may switch to red if they wish or stay white (for instance if there was an unengaged white across the way from him and he's afriad the other guy might switch to red on this second iniative drop)

Examples:
team 1: 3 guys vs Team 2: 4 other guys
example Team 1 charges team 2
team 1 all drop red, team 2 all drop white, team one declare targets, unenged member (or members) of team 2 will likely switch to red, (doubly engaged member of team 1 may want to make a defensive attack, or make terrain roll, This would probably be harder than in single combat since you are fighting in a group

example: team 1 charges but someone on team 2 gets ancious and charges:
Team 1 drops red, team 2 drops white except for one guy who drops red.
after reds declare targets, unless a team 1 member attacks a white team 2 member, none of the team 2 whites get to redrop initiative since the lines havnt met yet, next round they can join their stupid red member, but he probably wont last the round.