Here's an interesting situation:

XXA
XXX
FXX
TXX
EXX

A = friendly attacker
F = friendly fig
E = enemy fig
T = enemy fig

Here, F is blocking LoF from A to T (barely, because A could see T on a perfect diagonal if he was one square down).

Now, A could see E if T was not there, but here T blocks LoF from A to E.

This seems a little weird. What is really blocking LoF to E? It can't be F. So it must be T, but T can't even be seen by A. So how can the figure T, to which LoF is blocked from A, block LoF to E when A can't even see T?

Shouldn't A be able to see one of the enemies?

Get a peice of string and draw a direct line from attacker to attackee.Its hard to explain why you're getting the results you are but the string line pretty much tells you if you have LOF or not.

Well, your interpretation of the rules is correct.

This sort of chaining is possible because the figures are larger blockers than targets. It's as if they were wearing laser tag sensors on their chest, and hitting anything else doesn't matter.

I like the laser tag explanation.

That's a very good interpretation, nate.

Unfortunately, I wish it could be explained away like that. How can a medic's leg block the figure behind her without LoF to the medic's leg?

Goofy, but it's the way it's played by the rules.

FAX
OXX
EXX

A = friendly attacker
F = friendly fig
O = other friendly fig
T = enemy fig

I changed the figures to all be on the same team excpt for the (E)nemy so that Ranged combat can happen.

Is there any question on whether or not 0 blocks LoF from A to E? Extending the line further back will give you the original diagram.

The theory there is one that gets better treatment in both Warhammer and D&D, and it's called "shooting into melee combat". In those games, if you have a crowd situation and try to fire a weapon, you have to roll randomly to see who gtes hit, since you can't get a clear target from a grouping like that. In other words, you can see the medic's leg through your scope, enough even to see it block LOF to the person behind them, but the leg itself isn't a good enough target to shoot at. In HC, they use (overly) simplified rules for the non-gaming comic book crowd, so if you don't have a clear shot, you simply can't fire at all.