Assaults and close combat

[Narwan]

Unless it is a "life or death" situation when I go into melee fight I switch off the grenades from my infantry units, and definetely switch off bazookas, etc.

That's a smart move. Handgrenades are a grey area there; those are quite useful against enemy squads when in melee. But they give a fair deal of suppression, including to the unit doing the firing. And while rare, they can damage an AFV in the same hex.

Firing heavy AT weapons like RPG's or bazooka's in melee is a bad idea and I strongly recommend to turn those off. It's realistic too; the splinters and shrapnel from those blasts pack quite a punch at close range and can slice through thin armor like that of BTR's.
It's the drawback of the new feature that HEAT rounds can be used against soft targets too; it means people have to pay more attention to their HEAT type infantry AT weapons and turn those off every now and again.