The main difference is that projectile based melee weapons are (in general) negatively affected by the player movement. Even with inherited velocity.
Essentially, it boils down to the fact that you need to lead your target if the weapon is projectile based, which you technically still do need to do (sometimes) with raycasted melee, but in general it's much less of an issue.
Blockland has a funny minimum lifetime limit of 100ms for projectiles, which means that the most feasible way to fine-tune the range of a melee weapon is to adjust the projectile speed.
Shorter ranged projectile melee weapons therefore get hit doubly hard, because their range is bad along with a slower moving projectile. This is especially noticeable when you are chasing your opponent (with fast playertypes).
In general, projectile-based melee weapons require more practice to use well.
Raycasted melee don't have this problem because they hit near-instantly. Bushido's melee weapons have a pretty short range, and they still work well and quite easy to use, for example, even against fast targets, or as a fast playertype.
My bug mods are a pretty good example of how much the player speed effects the weapon. It's generally very easy to hit things with the small, slow bugs, even though their melee ranges are very short (slow projectiles). Meanwhile, the faster bugs can be very hard to use properly because they go so fast compared to their melee weapon projectiles (even with much faster projectiles).
At some point I'm probably going to switch most if not all of the bugs' melee attacks to raycast and see how things go. But I predict that the balance of the bugs will explode to pretty OP levels once that happens.
Yeah, there's effectively no difference between raycast-based and projectile-based melee weapons, so one is not better than the other. The best way to innovate melee weapons is with a system that gives it some sort of radius or path damage as opposed to being a glorified gun that shoots invisible projectiles.
Yeah, I'd love to see more interesting melee weapons tbh. I think that path/arc damage would be more interesting that radius, but it's pretty hard to implement and I'm not sure it has ever been done correctly in BL. I know that Lordician was attempting to make such a system at some point, but was having some funny vector issues (possibly engine bugs, can't remember).
I've been testing an attack that uses a radius check to deal damage, and the thing is ridiculously easy to hit with, even with a long windup time and relatively small range (it's basically the down-slam of a hammer weapon).