I'd like to know why we have it.
I'm not making this post out of anger or frustration, just curiosity.
Snarky answer: Because nobody has come up with a better solution to the problem in a sandbox game.
Detailed answer: All of the other options have catastrophic flaws that make the flaws of killshooter kinda mild in comparison.
1) No damage done to friendlies = greatly changing the mathematics of a one on many fight in (even greater) favor of the numerically superior side because now all the fighters in the conga line can fire without worrying about killing themselves or another friendly.
2) No damage done to friendlies, but shooter's ammo is zeroed = enemy was careless and ought to be down a fighter, but instead only have an unarmed fighter which is something that can still affect the fight as the friendly shooting player's enemy(s) don't know he is toothless. He can clear sixes still and act as bait.
3) Shootee takes the damage = wild wild west in the sky. Can never trust a friendly as they may kill you for the heck of it. Look out for the whines the first time somebody's Me262 is shot down while on final approach by a new player friendly.