So my previous attempt was quite a mouthful and hard to chew. so hard that folks never got it broken down enough to swallow it. and I can certainly see their point. I tend to get a little carried away sometimes. Let me try again, using the same ideas and doing away with the advanced "duel" all together, which went even further than necessary.
Here's the short version:
1. Challenge is made. Attacker has first dibs, defender can if attacker doesn't.
2. If you refuse the Challenge, you make a morale check at half your Leadership. Failure Demoralizes the character and rest of the unit.
3. During a challenge, double the wounds inflicted by the characters fighting when determining the total combat results.
4. If one challenger dies his side loses automatically and becomes Demoralized. Finish the units' combat, remove dead models, then make the normal morale check at half their leadership. If they don't run or get caught by sweeping advance, continue next turn with the loser's unit Demoralized and the winner's Inspired.
5. If both challengers are killed at the same time they cancel out. Don't count either character's inflicted wounds into the combat total and just let the units fight it out as normal.
Demoralized units halve their Leadership score (round up) and have WS 1.
Inspired units reroll failed morale checks and roll 2D6 on their Consolidation move, picking the higher result. (The reroll on morale would come in if the combat continued into another turn which they then lost, forcing a morale check to see if they fall back.)
Both Demoralized and Inspired effects end when that combat is finally resolved. If it runs through several turns and/or another unit joins in, these effects continue. Once a unit leaves the combat (successfully falls back) it returns to normal and makes normal regrouping checks.
Okay, that's the short version. If you prefer, stop reading now. If you want the same rules but with a little more explanation, continue reading:
1. You declare a Challenge. The attacking side gets first rights to challenge but if they don't the defender can. This isn't done lightly, however, because winning and losing have an impact on the rest of the combat.
2. Refusing a challenge. Instead of your character automatically being whipped and retreating with his tail between his legs (6th ed), he gets a chance to convince himself and his men that he's not a coward, just not stupid enough to fall for this trick. But that's some fancy talking he'll have to do!
When you refuse a challenge, make a Leadership check at half your normal value (rounded up). If you fail your entire unit is Demoralized for the duration of this combat (meaning until there is no longer any close combat going on from this engagement and someone has probably made a consolidation move).
Demoralized units count their WS as 1 and their LD as half normal for the duration of the combat.
3. Fight the Challenge. As usual, the characters only hit each other. Because they are fighting for the honor of their units, their fight is a little more important in the eyes of their men than the rest of the brawling mass. Calculate their personal combat resolution separately from the rest of the units fighting, then double it and add it back into the total combat resolution for their side.
Example: Marines vs. Orks. The Marine Captain attached to some tac marines challenges the War Boss attached to some boys. He accepts. They trade blows. Captain deals 2 wounds, War Boss deals 1 wound. These double to become +4 and +2. The rest of the Marines and Orks fight it out, both dealing 2 wounds to the other. So the total combat resolution scores are marines 2+4 and orks 2+2, so 6 vs 4, the marines win by 2. Make the usual rolls and results of having won a round of close combat by 2, including fall backs, sweeping advances, and consolidation moves.
So at this point fighting the actual challenge is the same as in the 6th ed rulebook except that you are doubling the wounds dealt by the challengers in the final calculation because their result is more important.
4. One challenger is killed. Because the challenge and the rest of the massive brawl is all going on at the same time, you finish the close combat round and remove all casualties. Don't worry about the final combat resolution score because now it doesn't matter. If your leader was killed in a challenge you automatically lose the combat round. No unit who watches their hero die can claim victory and they are, in fact, Demoralized. Their Ld is now cut in half (round up) and WS reduced to 1. The side whose hero won the challenge is Inspired. They get to reroll failed morale checks and if they end up winning the overall combat their Consolidation move will roll 2D6 and pick the higher result.
Okay, now finish the combat round, the loser making their morale check (at half power). If they fail, roll for fall backs, sweeping advances, etc. If this combat is not concluded at this point (maybe the loser is Fearless or has ATSHNF and so refuses to fall back), the Demoralized and Inspired statuses last into the next turn, and beyond if this engagement keeps going (maybe it's joined by another unit next turn).
If the loser was routed or caught in a sweeping advance, the Inspired winning unit rolls 2D6 and picks for their Consolidation move. After that the combat is over and they are no longer Inspired. Move on with the game.
5. Both Challengers kill each other in the same round. These negate each other. Don't count any wounds they inflicted in the final combat result and have the units still fighting it out just do so as normal.
The "Get 'im Boss" and "Glorious Intervention" rules stand as they are in the rulebook.
I think this simpler version is actually much better. Sorry, I got a little too into it the first time around. I hope this makes more sense. I also think that if you play it out a couple times (as with most rules in the game of 40,000 rules) it'll click better than just trying to read it on the internet. Please give a whirl and get back to me with feedback, comments, and suggestions.