Edited because I realized something nifty I wanted to tweak.
If not in melee, a character can move at at Encounter speed and still take actions (such as casting spells or pulling equipment out of a backpack, etc). This can be used to close into melee and attack. Alternately, a character can move at up to Exploring speed at a run, but can take no other actions.
A combatant in melee can maneuver around an enemy at Encounter speed, given sufficient room, while still attacking. Thus a party may attempt to 'wrap' around an enemy unit to outflank and even surround them. A combatant in melee may also choose to withdraw or retreat from combat in lieu of attacking. A withdraw action moves at 1/2 Encounter speed, and grants the combatant First Strike against an advancing enemy. A retreat action moves at full Encounter speed, but makes the combatant vulnerable against advancing enemies.
If a combatant chooses to advance against an enemy that is withdrawing, the enemy gets First Strike: it makes a melee roll against the advancing combatant as soon as contact is reestablished. Only if the combatant survives does he get to make his own attack against the enemy. In the case of advancing against an enemy that is retreating, the combatant gets +2 AP and ignores the enemy's shield (if any). If no combatant advances on a withdrawing or retreating enemy, the enemy is no longer in melee and can move as normal, including fleeing at a run.
I don't use variable damage or Weapon vs AC modifiers, but I do want weapon choice to matter. A few guidelines seem to be sufficient: Swords can be drawn and used in the same round. Blunt instruments are more effective against undead, where cutting and stabbing them generally does half damage. Axes are normally bearded, and therefore are better at disarming and similar maneuvers. Spears and other long weapons can attack from the second rank. Bows are capable of indirect shots, arching over the line of skirmish to strike further enemy ranks. So on and so forth.
As a general rule, if a combatant is attempting to fight an enemy with superior weaponry (e.g. bringing a dagger to a sword fight), he is "outclassed" and suffers -2 AP. What constitutes "superior weaponry" may change contextually (e.g., once you've slipped past a pike's superior reach, it's the pikeman who is at a disadvantage).
Tactics, Stunts and Maneuvers
If two allies are attacking the same enemy, each enjoys a gang-up bonus of +1 AP. If the allies are on opposite sides of the enemy, they also enjoy a flanking bonus of a further +1 AP. Thus, if the party has completely surrounded a monster, each attacker enjoys a full +2 bonus.
Any combatant can declare a stunt in order to achieve some special result or advantage. Stunts are adjudicated by the referee. In general, if the stunt or tactic provides a clear advantage on par with outflanking an enemy, it's worth a +2 AP bonus. In rare cases, an overwhelming tactic may actually be worth as much as +4! However, stunts can be risky - a poor combat roll may leave the combatant at a disadvantage. The classic example is the fighter leaping off a balcony to attack foes below. This unexpected move could provide a substantial bonus, but an unfortunate roll - say a natural 4 or less - may leave the fighter sprawled at the feet of his enemies.
A combatant may also declare a special move, such as attempting to disarm, push, knockdown, stun, or break through an enemy line. The combat roll is made as usual, including the damage roll. If the AP roll indicates a wound, the enemy can choose either to accept the damage as rolled or to suffer the effects of the special move. On a natural 20, the enemy does not get the choice.
A combatant may fight defensively, foregoing all attacks to concentrate on defense, for a +2 AC bonus. A Fighter gains an extra +2 bonus which may be given to an adjacent ally. Only a single fighter can defend a given character.
A fighter armed with a spear or lance can charge the enemy if able to move 40 ft in a line and attack with +2 AP and +1d6 damage. This is most effective when mounted or unencumbered, but the movement can be split across two rounds if not interrupted (such as by being attacked in between).
If the fighter is defending against a charging enemy and is armed with a spear or lance, he may "set the spear" to gain First Strike and +1d6 damage against the enemy. This counterattack can be attempted as long as the fighter is not surprised.
A PC with "best of 2d6" or "best of 3d6" damage can declare a massive attack. The attack suffers -5 AP, but if a wound is scored, the damage dealt is the total of all damage dice, not just the best. This maneuver is also known as the "Ash Smash," at least by Ash Slayum's allies.