The most important point is that the charmed character is not a minion or mindless.
The game effect for combat would be that the charmed character would only fight if old friends (which he would retain his friendships with) were threatening his new friends. Even so, the charmed character uses the least lethal effective method available to him.
Also, personally, I believe charm should only be effective for the caster, especially if the charmed character is forced to fight friends. The charmed character is friends only with the caster, not his allies, although he would certainly be neutral to them. In my opinion, the charmed person would only protect the caster, especially when fighting friends to do so. The way Charm Person was played on Saturday was WAY above the power of a first level spell. Of course, this is my opinion.
I think this is where the death of the caster of a Charm Person spell comes into play. True, the spell doesn't end, but when a friend dies, I don't think the spell transfers to it's allies. Of course, as I said, this is my interpretation, but as we played it the spell is MUCH more powerful then first level.