How do you think it should work? I'm not talking about someone unwilling that would fall under shooting into melee combat or grappling or somesuch. The reason I ask is because in a recent encounter I ran where my players were ambused by an enemy sniper they opted to run straight at him in a conga line with the Ork in front so that he'd shield them with his vastly superior toughness bonus. It was so clever that I opted to just let them do it.

While not required by the rulebook I opt to run the combats with miniatures on a hex map, and it works great except I now realize it raises some questions regarding lines of sight and npcs/players as cover. I think in the future I think I'll just apply a -20 penalty for shooting past someone who directly in the line of sight, and on failed non-jamming rolls say the guy who is in the way gets hit instead 50% of the time.

I'd probably apply a penalty (your -20% works well) and if the shot misses SOLELY due to the penalty then it hits the cover. Otherwise, you could require called shots to hit the guys behind the cover-man and if it misses due to the called shot penalty (…. isn't that 20% anyway? I could be wrong, my book's not handy) then it hit the cover. With an Ork or otherwise much taller, wider person in front, I'd also rule the called shots CAN'T choose the head, since it's entirely concealed.