It makes a little sense, but unfortunately it tends to negate all the interesting aspects of Iron Heroes combat, like stunts and challenges. It also makes it almost impossible to defeat opponents who have some form of the Improved Grapple feat, as we found out when tackling the Marrowbreakers. Not being able to break the grapple, attack your opponent, or draw a light weapon makes being grappled too difficult, meanwhile attacking from outside the grapple means you cannot do sneak attack damage, and you risk hurting an ally with each attack.
The sooner we get past all the grappling monsters the better. Fourth edition D&D will be out by then though.
]]>http://www.d20srd.org/srd/combat/specialAttacks.htm#grapple
Also look at the table on the right side of this page:
http://www.d20srd.org/srd/combat/combatModifiers.htm
Across the row of "Grappling (but attacker is not)" you'll see two columns, one for melee and one for ranged attacks. Note only the ranged attack column has footnote 3 which states there is a random chance of hitting either target.
Melee weapons are closer in and you can time them easier. ;)
(That chart and footnote is also in the PHB)
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