There are a number of issues at play. First, I said "largely" a sideshow because there are clear exceptions such as the Storm Angel. The basic logic is that you would never enter HTH unless it was a better option than fire combat, and with modern weapons, there is generally no contest. An HTH specialist would have to be deadlier in HTH than they could be by simply shooting the other guy.
So, in keeping with LOS's "meat grinder" philosophy, you close for the quick kill rather than engaging in some drawn out sword fight. For example, if two Mk I Assault Fiends faced off, they would have a 26% chance to kill (ie., score two kills) with one blast of the Napalm-X but 44.4% with the trident&bayonette.
Rarely, one could use HTH defensively. Door opens and a flechette gunner is about to ruin the day of a Fantasian squad. However, a point of leadership might be able to throw a guy into HTH so with the CCM the flechette gunner needs 8+ on 3 dice, which is not so scary. Unless the flechette trooper had a side arm or some HTH weapon, he would be in trouble.
There is a point about the cultural aspects (or machine equivalent). The UNE and Fantasians mostly play it straight and only carry HTH weapons for defensive purposes, in case someone else locks them in HTH. The Black Empire is the exception in that their elite troops will want to close with you while the peons provide supporting fire. The Machines are all over the place. The Hattins, who border the BE have specialized units such as the cavalry pack that will close for the kill. The Infranites are a warrior culture who are all trained in HTH but have adopted adopted more standard weapons, so they play it straight but always have the arm razors for defensive purposes as one more manifestation of the "dial-a-warrior" aspect of their figs.
There is a lot that could be done in terms of rules: advanced grappling techniques and parries come to mind. The problem, as with pinning, wounding, pips and buffs and such is the question of bookkeeping and slowing down the gameplay. If someone has an elegant solution, then I would like to hear it. Otherwise, we are looking at optional rules and even getting rid of the dice rolls for locking and just say that once you are at range 1, then you are locked and that is it.
You make a good point about the issue of friendly fire, especially in a crowded room or a "[insert slandered group here] firing squad" situation with the target in the centre of a circle of guys with guns. If you want to get all Gun Fu about it, watch the fight scene in Ultra Violet where the hero wins a gun fight, without a gun, by manoeuvering among the bad guys causing them to shoot each other.
At one point, I was thinking - more for Planetstorm - that all fire is suppression fire of some sort, which solved certain other problems, allowed for friendly fire, but caused other headaches.