This is a good discussion. I think it addresses a problem that many RPGs have attempted to address, with limited success.
3E introduced the attack of opportunity (already known by other names in wargames) and one result was that combat became very static. Creatures clumped up somewhere, and since no one could flee without getting hit, there was practically no movemenet on the battlefield. 4E changed this a bit by allowing more move actions that didn't provoke AoOs, and also forced movement. This worked well to address the problem IMO and made for much more dynamic battles, but it was a complex solution. D&D Next is tackling this very question in its beta-testing: it started out with no AoOs but the feedback was that monsters could charge the spellcaster too easily and that the fighter couldn't do anything to protect him (and the other way around for monsters); now they brought in essentially the same AoO rule that DCC uses, the free whack, but I feel that the designers have not said their last word on this topic.
I think there is no easy solution. The combat becoming static is a real problem of AoOs in my opinion. 3E battles really became stale mainly (IMO) because of that.
What I would hope for, for a battle to be cool, is that the opponents move about the room and jump on chairs, pick up a bottle to throw, move up on the balcony to fire a dagger, and generally be mobile to access different areas in the environment. However, no one is going to try that with the free whack rule.
I think perhaps one way to address that is to change the trigger of the free whack rule towards intent instead of action. What I mean is that, presently, the free whack rule trigger is based on action, namely: when a first creature moves away from a second creature, the second creature gets a free whack on the first. The judge should then watch for any "movement away", and award a free whack if there is one. If instead you use intent, then you could say that the rule is: if a first creature wishes to flee the battlefield and is engaged in combat with a second creature, the second creature gets a free whack. However, if the first creature moves away from the second creature but its intent is to continue to battle it, such as by jumping on the countertop, strategically moving back to lure the second creature into a trap, or the like, then no free whack. Perhaps the battle-movement, if I may call it that way, could then be limited according to circumstances, i.e. the first creature might not benefit from its usual full movement capacity. It then becomes a judgement call by the judge, who can adjudicate depending on the feel of a particular battle situation.
Maledict Brothbreath, level 4 warrior, STR 16 (+2) AGI 7 (-1) STA 12 PER 9 INT 10 LUCK 15 (+1), AC: 16 Refl: +1 Fort: +2 Will: +1; lawful; Armor of the Lion and Lily's Blade.
Brother Sufferus, level 4 cleric, STR 13 (+1) AGI 15 (+1) STA 11 PER 13 (+1) INT 10 LUCK 9, AC: 11 (13 if wounded, 15 if down to half hit points), Refl: +3 Fort: +2 Will: +3, chaotic, Robe of the Faith, Scourge of the Maimed One, Darts of Pain.