[Fyron]

Initiative matters on every turn of combat (especially if you do it right and give each ship a randomizing factor every turn)...

The overall order of play isn't what is important; what matters is who gets to fire all of his weapons first before taking any damage. Sure you can swing the pendulum in the other direction with short weapon ranges and high hit point amounts, but not everyone wants to play a slow(er)-paced slugfest.

"In CB, initiative questions are completely swamped by ship designs, fleet composition, and most importantly; strategies and formations."

All of which would be heavily tied into initiative if such existed. You'd probably want to include light, high initiative ships for some quick coup de grace action on wounded targets before they could act, and slow pounders for the main damage-dealing segment.

Most of the cons you speak of with SE5's real time combat are not inherent to such combat systems, but rather poor choices Aaron made (eg: explicit slot layouts, layouts based on shipset instead of mod by default (luckily fixable), the timer implementation, stacking...). Neither game is a very good example of its combat engine type.

"What if SE4 were upgraded to have a system which works exactly the same as currently, except that ability loss is deferred until the end of the turn."

Such would be better than the current system, but I think a good initiative system would be preferable.