The mutual surprise rule is there to abstractly represent things that aren't present in the game - scouting and stealth, namely. You don't get immediately shot when coming out of the woods because the game assumes you were sneaking, or just leaned from behind the tree to sneak a peak. I think it was a stroke of genius to invent such a simple rule that abstracts so much (non-existent) tactical depth.
Naturally, you can disable it, but what then? Defenders always win, as there would be no way to storm anything without getting shot - which is maybe acceptable, but also no way to SCOUT without getting shot, since you can't sneak, you can't throw grenade through a window, you can't crawl through a ventilation shaft to attack from an unsuspected angle, you can't use terrain to your advantage. You just send a pointman forwards and he dies when the enemy sees him (unless he has godly reactions and moving 1 tile per turn). You just go through a few Rookies securing the LZ, then set up a siege. As with all sieges, it consists of machineguns to mow down anything that comes close, and heavy artillery to flatten the area. With mutual surprise rule, this is still an option (albeit more risky), but not the ONLY option. There is some balance between the defence and the offence. With what you're proposing, the focus would be heavily shifted towards defense. Which is kind of not in line with how special ops should work. We're moving back in time from World War III to World War I. Rush the enemy lines with cannon fodder, they die but the enemy positions become exposed and you can flatten them with heavy artillery barrages.
So, in a nutshell, if you remove mutual surprise, you'd need to add something in return to avoid the game being dumbed and dulled down. Namely, complex stealth & movement mechanics like in Silent Storm (or, to a lesser degree, in Jagged Alliance), including the option to lean from behind a cover and other scouting methods that do not require moving (binoculars sweep?). AND like it has been suggested, add a Reactions bonus to the active side because even all the stealth won't save another important aspect (combat option) of XCOM: fast paced, frenzied shootout. I AM ALL FOR IT, but who's gonna code all that? who? who?
And a final note, I understand you position well. You're a defensive type of player and you want your tactics to be more effective (and yeah, Mutual Surprise tends to ruin them... even if a grenade suddenly thrown from the bushes seems quite realistic to me). I am an offensive type of player and I'm often abusing Mutual Surprise to my advantage. Especially with alternate movement options. So we both have very diverging personal feelings about it. But I've tried to describe the problem with as much objectivism as possible.
