If my Devastator sets up a kill zone with the trigger being "Any enemy that walks into or through the kill zone gets shot at with Full Auto" what happens when multiple enemies go through it? Does he get a shot at each enemy? Or does the act of shooting at the first one act as an action, therefore cancelling overwatch?

Once the trigger event for overwatch is entered, they get the shot off, and then they exit overwatch. The rate of fire of the weapon does not magically increase. When the players turn comes back around, they may fire as normal.

Overwatch is meant more for a longer term setup of supressing fire. Its on the same order as readying an action (and really is just a more codified way of doing it).