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At tournaments I've seen individuals drop down combat squadded units from reserve in DOA Blood Angels lists. However, looking at the FAQ I don't see how this is possible... GW states:

Q: Can you take a Drop Pod with a 10-man squad and then put a combat squad in it, deploying the other combat squad on the table, or leave it in reserve but not in the Drop Pod? (p32)
A: No, because squads that are placed in reserve may not break down into combat squads.

Have people played this wrong or am I missing something?

They split into a combat squad when they are deployed. Meaning you can't walk half on and drop in the other half, or do half in the drop pod and half DoAing in... but you can declare the entire unit to be DoAing, then split into combat sqauds when you deploy them (when placing the deep strike marker).

The Reserve rules (main rulebook) tell you that when a unit is placed in reserve you do so instead of deploying it. And that when it arrives from Reserve, you deploy it onto the table. Thus the unit may Combat Squad on arrival, as Combat Squadding is done when the unit is deployed.

The question the FAQ is answering no to is splitting the unit BEFORE it (or half of it) is actually deployed.