One way to work this, which some players do not like at all, is everyone takes their first action based on initiative rolls. First action is completed. Then, everyone takes their second action based on initiative rolls. Second actions are completed. Third and Fourth, etc.
As for simultaneous initiatives, that is normally up to the DM in my experience. Unless the DM really wants to test the players and their beefed up AC, the characters go first. Then again, it's always fun to see if the Rules Wizard pumped up the Dex and AC enough to withstand the pounding that the character is about to take.
Then we get into the tricky mechanics of spell casting. If casting takes 2 actions / round: Prepare / Cast, then it stands to reason that the fell beasty could get its first attack in while or before the spell is prepared, thus breaking concentration: automatic failure or roll the percentage dice and see if the spell goes off and then roll to see which direction and if there's a character or a mob there, if the spell hits that PC / NPC. Could roll to save concentration too, but would need to have that skill pumped up.
Same could be said for the whirling dirvish of doom. Hit on 1st action, get hit on mob's 1st action, spend 2nd action recovering, etc., round.
If a benevolent DM is running the game, then PCs take all actions, mobs attack, auto-block / dodge / parry *roll*. Not one of my favourite renditions, but it does make the combat flow, but not as realistic or potentially lethal to the characters.
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<li><a href="http://ghlbeyerlein.tripod.com"> My web site</a>
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<li><a href="http://www.grid.org/projects/cancer/"> United Device's distributive computing Cancer Research Project</a>
<li><a href="http://www.firstgov.gov">FirstGov.gov</a>
<li><a href="http://www.tsa.gov/public/index.jsp">TSA.gov</a>
<li><a href="http://www.whitehouse.gov/homeland/">Homeland Security</a>