I agree on the problem but not the solution. You are fighting other infantry aswell. You don't have a problem with them having the same HP because they don't kill you that fast.
So your problem here is with the flamethrower. I would like the flamethrower to have a damage reduction against targets not in cover. Flamethrowers weren't really open field weapons for storming enemy lines. Their main use should be city fights and clearing trenches/cover. So let them shift a bit from a general purpose weapon to a specialist weapon.
The problem will still arise in 2 squads vs 2 squads. If in cover: you will die from the flamethrower, if out of cover, the other squad will get you.