Of course
-The two combatants are always one tile away, never in the same tile unless one is on the ground.
The easiest way would be to allow for multiple units in one tile at once. Since toady calculated the tiles as 2x2x3, a single tile could possibly hold 1-4 dwarfs, depending on their girth. Grapples and clinches could require you to be in the same tile as the opponent, thereby reducing the number of tiles a wrestling match takes place in.
-The position of the combatants, both inside the tile and in relation to each other is not tracked.
If your inside the attack range of the enemy, he can hit you anywhere. True combat is determined by what part of your body is able to reach the enemy's, and what part of the enemy's body you can hit. If you are standing up and the opponent is laying face down on the ground, the opponent should not be able to attack you properly, and should not be able to gouge your eyes out. One way to do this is have it so that each round of combat, you may either:
strike; block and parry; grapple and throw; manoeuvre and escape; hold, choke and submission.
Your position could either be tracked in static boxes (standing, kneeling, crouching, pinned, etc) or it could be an arbitrary percentage, with 100% being perfect stance and position, which is then compared against the enemies. Manoeuvring can be used to get into a more advantageous position in either case (like behind someone to hit their spine) or to move out of a dangerous position/hold (a break or escape).
-The types of moves you may make are hard coded into the raws of each caste/race.
I'm not quite sure yet on how to properly do this. Perhaps make it so that body parts with tokens may perform a type of attack, and then base the effectiveness of that attack on the physical properties and materials. For instance, a digit token could be used by all claws, fingers, nails and talons; required to make use of gouging, clawing and pinching. While a tentacle clawing at you (with [digit] token; it's a small tentacle) might not be very effective, it should not be restricted in the raws.
-Different moves are no different from each other, except the body part that is used.
Each attack should have a different chance of success, failure, injury, damage, speed, subtlety, counter-ability and recovery. A jab is easy to defend against, but they are faster, less tiring and harder to predict than a haymaker. The moves should be used when appropriate, without the arbitrary punch to the head. All moves should be effective against different targets as well, so a punch would be effective against the throat, but a spear hand or chop would be even more effective. You should also be able to invest how much of your energy, body weight and positioning you should commit to an attack, thereby giving a risk/reward system to the fighter.
EDIT: Ninja'd, I should really stop walking away from the keyboard when in the middle of typing.