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|..[color=yellow]o[/color][color=red]h[/color]...| |..[color=yellow]o[/color]....|
|.......| |..[color=red]h[/color]....|
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|..@....|1 |..@....|2
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In situation 1, if the human shoots at the orc (in melee with the dwarf), he takes a -4 penalty unless he has Precise Shot.
In situation 2, if the human shoots at the orc (in melee with the dwarf), he takes a -4 penalty unless he has Precise Shot. The dwarf is also providing 1/2 cover for the orc, so the orc gets a +4 cover bonus to AC.
If the human misses the orc by 4 or less, then he missed
because the dwarf got in the way. The attack roll is compared to the dwarf's AC. If it beats the dwarf's AC, the dwarf is hit.
If it misses the dwarf's AC, we compare it to his flat-footed AC. If it
would have hit the dwarf except for his Dex and Dodge bonuses, then it missed because he got out of the way... which means he didn't provide cover after all, and there is once again a chance that it hits the orc. Compare the attack roll to the orc's AC, without the cover bonus. If it beats the orc's AC, the orc is hit; if it doesn't, it misses.
Cover is fun
-Hyp.