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As for how armed and unarmed fare in combat against one another (apart from the issue of damage factors), I think the rules address the question of weapon reach, which would give the armed combatant the advantage, which is definitely appropriate. Only a very special technique should be able to overcome it (possibly expressed as a subskill or a gift).

In general, the only kinds of skills I omit from the list are those that are so narrowly focused that they have no place outside of a specific game world.

I’m in the process of putting together a “Combat Fudge” based on some of the stuff I talked about on the Fudge List. One of the nice little things that drop out of it is that similar-level combat Skills, like various Martial Arts, can have distinct differences without being a heavy system.

As for Weapon against Fists issue… I always considered that the domain of the GM to make a call on depending on the type of game you want. Personally, my opinion is, a weapon is always better than fists unless the fighter has some technique to beat the weapon-user (but that’s a very dangerous succeed or get hit with no defence kind of thing).