Potential house rule based on the idea that with rounds that represent "exchanges" rather than single actions, it isn't always useful or logical to have events resolve sequentially. It also addresses the idea of people with good reactions being caught not knowing what to do, because nobody has acted yet. Note, this method will likely take a little longer.

Initiative as Martial Awareness

1) Roll initiative as normal. (Vigilance or Cool)

2) Assemble the pool using direct slots (rather than just PC/NPC)

3) Starting with the lowest initiative, the player or GM declares their action. Make a note of what the action is.

4) Continue declaring actions until you reach the highest initiative count.

5) Resolve any movements.

6) Resolve any actions (using the new ranges & cover, if applicable). Everyone can roll this at the same time, because you all already know what you're rolling. (A note on ranges – if the ending range is 'out of range' for you, upgrade the difficulty of your attack. Melee attacks that end up out of range still roll against a base of Average difficulty)

7) Repeat for next turn.

I haven't tried this at all, and am not sure I'm going to bother to, but I'm still curious what people think of it.

If I recall correctly (it's been nearly 20 years) but I seem to recall that the old BattleTech and MechWarrior tabletop games used a similar method for initiative. The idea is that winning initiative meant you were able to make your tactical decisions based on what those with lower initiative scores rolled. All decisions on movement and actions were made and then resolved simultaneously at the end of the round.

It'll allow you and your players to have a more "tactical" game but as you surmise, yes, combat will likely take longer.

The X-wing miniatures game does something similar.