Ranger, Crothian, the rules for cover are almost identical to those found in D&D. If you shoot into melee or at someone behind someone else, the idiot in this case, and your roll was sufficient to hit the target without cover but now misses as a result of the cover, the idiot, your shot/strike hits the cover. As far as the idiot standing in front of the target area, I would rule cover to all those that had it by line of sight. The idiot is covering some but not all in the target area.
Also, damage from autofire is handled differently than other modern setting games. All targets in the area of effect, 10'x10', make a reflex save and take damage acourdingly. Individual bullets are ignored as the damage is the same for each target just like an area effect spell. However, to autofire you need at least 10 bullets unless you have the requisite feat, Improved Autofire or some such, that lets you walk your fire in a 5'x20' line and use 5 bullets instead of 10.
I haven't tried these rules yet but I must say I am intreged.