Eh, I hate to be a hypocrite, but this is a great point that I can't leave be:
You are completely right about this being a wacky situation, and it did slip my mind. So there is one good argument for 5' step. But with the 5' step, once the fighter has been there for a round, you just get round after round of wackyness as the wizard keeps stepping away from the fighter unopposed. So in my mind its 1 wacky round vs 1+ wacky rounds (current system).
I suppose an easy fix to the above problem would be to simply break the round into two pieces. You run thru the initiative count once, and everyone takes either a move action, or a standard action. Then you run thru it again, and everyone takes whichever action they have left (or finishes their full-round action). Next cycle thru is the new round. AoO are only possible if you didn't move on your last action.
So in the above example, the fighter wins initiative, and takes his move action towards the wizard. The wizard then takes his standard action and shoots a lightning bolt at the fighter. No AoO occurs because the fighter moved on his last action. Next, the fighter takes his standard action and attacks the wizard (or he finishes his full-round charge, and attacks).
The wizard then gets his move action. If he moves away from the fighter, he will now suffer an AoO, since the fighter didn't move on his last action. Wizard does nothing with his move action. Fighter goes again, this time on the 2nd round.
Slightly complicates the rules of course, but not too much really, and the gains seem worth it. The only problem is the 5' step messes things up even more in this situation, but in this case I don't see the need for it at all. Well, at this point I'm breaking my own word, and again turning this into a HR post. Sorry... :\
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EDIT
Lol... just realized that this thread HAS been moved to the HR forum.

Well, in that case, feel free to discuss my above HR as well

.