Is my reading of the rules correct that using a pistol in melee gives you a +20 BS to hit (point blank) but prevents you from parrying. There's no other penalties

I'm not sure you get the point blank bonus when you're firing in a melee. It certainly counts as point blank for stuff like Scatter but I'm not sure you get the BS bonus - otherwise why would anyone ever use a sword?

I'm certain you don't get a point blank range bonus if you're locked in melee.

I'm certain you don't get a point blank range bonus if you're locked in melee.

This is correct. I'm not sure where I read this- I think it might have been in a FAQ post- but I know that I did read it.

You get no range bonuses in melee and can only fire single shot.

I'm pretty sure you don't benefit from sights either (?).

I feel like the pistol rules for melee in DH are retarded. In my games, I allow burst and full out when engaged in melee, but no point blank rule. I also make the shot dodge and parry-able with a +10.

I feel like the pistol rules for melee in DH are retarded. In my games, I allow burst and full out when engaged in melee, but no point blank rule. I also make the shot dodge and parry-able with a +10.

This makes melee weapons pointless. A pistol firing a burst will usually do about the same damage and will get a bonus to hit and will get extra hits. Except for ammo issues, there is no reason to carry a sword or suchlike.

This issue is dealt with in BC and OW, but in DH it makes melee weapons superfluous.

I believe you also get a penalty if you are using the pistol in your off hand and you do not have the "Ambidextrous" Talent.

In the end its up to the GM to assess the situation and give bonuses or penalties accordingly as every situation and PC differs.

No range nor semi-auto fire is doable in melee; see it as firing from the hip instead of actually extending your arm out and looking down the sights, relying more on hand/eye coordination than actual aiming.