The system works really well in single player and it makes somewhat sense if you think about it ("as long as members of the party are queued adjacent in the initiative queue you can make each one of them act in the order you want"), but yeah, I can see how that can cause some confusion in multiplayer.
On one hand I assume that people playing together are either in the same room or in the same voice chat and it shouldn't be too hard to coordinate with each other and decide who goes first.
On the other hand I can easily agree that the option would be nice to have in multiplayer games.
