I did a homebrew for 7th to revise Overwatch, because I felt that the 8th ed "only half your army may reserve" is a heavy-handed bandaid that doesn't actually fix the problems with Deepstrike/alphastrike armies. These rules would replace both Overwatch and Interceptor. Lemme know your thoughts.
Any unit in 40k can Overwatch unless specifically noted otherwise. A unit that forfeits shooting, running/flat-outing, or charging may enter Overwatch; Overwatch lasts until the start of your next turn if it's otherwise unused.
During the opponent's turn (meaning Overwatch attacks cannot trigger counter-Overwatch attacks), when an enemy unit wishes to shoot, charge, or manifest a Malediction/Witchfire, the Overwatching unit may immediately interrupt the opponent's game turn to shoot that, provided the enemy unit either:
A) Is within 12" of the Overwatching unit.
B) Is targeting or would otherwise affect either the Overwatching unit, or a friendly unit within 6" of the Overwatching Unit. (This means even non-targeted powers like Beams and Novas would trigger Overwatch.
Overwatch is resolved at -1 BS to a minimum of BS 1, and is based on the movement you took in your previous turn. Flamers are treated as normal, or they have the option to perform Wall of Death against units charging the Overwatching Unit, which is modified as follows:
-Wall of Death does D6 hits, but may only remove models within 12" of the flamer.
Any abilities dealing with Interceptor, improved Overwatch BS, Grim Resolve, Supporting Fire, etc, are replaced with the following USR:
Sentinel: Ignore the -1 BS penalty to Overwatch.
I feel the system is simple enough (more streamlined than 2e's "overwatch past the blind grenade" stalemates that could occur) and promotes combined arms support. Plus there are some cute tricks that you can still do with it, like conga-lining a Guard blob up the field, with Wyverns on overwatch to protect the advance as an abstraction of rolling barrage tactics 101.