[Joe]

I think I might be on the side of the butt-head here! Are you sure that "penalty" and "no effect" are the only good options? In an over-the-top genre like this, I think I'd be inclined to give the martial artist a bonus for his amazing mobility - he can attack from (and retreat to) unusual angles, and so forth. I'd want to say that the point he's spent on it show that he's used to this sort of combat, while his opponents are not. (In a world full of armored weapon master Knights, Martial Artists need a bit of help being effective in straight-up toe-to-toe combat, anyway, and this sort of shenanigans seems like precisely their schtick)

I don't have my books in front of me, and I could be thinking of GURPS rather than the DFRPG, in which case, my apologies), but I seem to remember some explicit rules that provide a bonus for just this situation.