McKnight: Well shoot back!
In the fast paced settings of urban warfare this can occur quite often. Making the "kill them all let God sort them out" tactics from fantasy RPGs very dangerous. Taking care not to shoot friendlies is a serious concern. This seriously impacts the value of initiative, since having initiative in most games is only valuable if you get to fire first. More so if characters have only split seconds to tell between friend or foe, should minute long conversations between players be allowed?
Have you had friendly fire in your games? How do you handle determining between friends or foes?