Actually, I would allow Bucklers to be used to "block" (missile deflect) projectiles like spears and arrows. I mention that Buckers provide no passive defense but provide a +1 OCV to block. This should apply to those who allow shields to be used to block missiles. What I do suggest disallowing is using a buckler as Cover, which is a kind of passive defense.
I didn't create the Shield Wall maneuver. That already existed since at least the 5th edition, if no earlier. I believe it appears in the Fantasy Hero books. I believe the justification for the additional bonus to DCV is that with a shield helping to protect one's flank, it is easier to utilize the shield to prevent attacks from getting in. I like it, thus I use it. It becomes one of the little details that characters who want to use tactics and teamwork can use to their advantage and I believe that's something that should be encouraged whenever possible. It also gives the Teamwork skill one more thing to do besides pulling off Coordinated attacks.
As for penalties for fighting so close together. I might provide a penalty to Dex to implement movement-based maneuvers. For example, 5 characters form a shield wall to try to advance on a horde of orcs coming across a drawbridge. They successfully stop the Orcs, but an orc shaman tosses a fire-ball spell their way. The characters need to Dive-for-Cover but are in each others way, so I may provide a penalty (-1 to -3?) for them to DFC!
Shield wall rules have been around since at least 4th. They might even have been in 1st.
Personally I think the biggest disadvantage to being part of a shield wall is that it would be very hard to dodge or shield block. Doing either would negate the shield wall bonus, for yourself and for the guys next to you (who might look dimly upon your cowardice).