You fire two shots, then it has to reload before it can fire again. If you put it away before it's finished reloading, then next time you take it out it does the reload instead of firing.
In Kaje's version, you lose your two bullets whether or not it's already been reloaded before you put it away, which doesn't make sense. In one deathmatch server I played, this got especially annoying as there were many "click to activate" ladders and doors...
"I've climbed some stairs, time to reload"
"I've opened this door, time to reload"
"I've used my other gun once, time to reload"