Shouldn't a drop weapon incur SOME penalty. Even if you are lucky and can pick it back up immediately, shouldn't there be some penalty.

For most HOL, there is zero penalty. Effectively removing it from the game for most battles.

So a guy can be disarmed, pick it up, defend my next attack, and hit me 4 more times in the same round.

In most gaming systems, you would at least lose one swing or have a major defense negative for the next swing on you.

Some gaming systems may also view this as an "action". If you get 4 actions per round, then if you are lucky, you can pick it up right away, but you burn an action.

The real problem is that certain skills are effectively removed from the game for all glads.