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I find the standard way of choosing forces awfully limiting. Having to buy full squads really restrains a lot what sort of teams you can build. As figuring point costs for individual models is not terribly hard, would it cause any unforeseen problems if instead of buying full squads the players would compose their teams by buying individual models? I think this would lead to more characterful teams.

There probably could be an additional limitation that you could not start another squad until you have enough models to meet the minimum requirements of one squad of that type (IE, you could not buy a second tactical marine with a special weapon before you have bought three bolter tacticals and a sergeant.)

Has anyone tried this? Does it work?

There's another set of fan-made Kill Team rules (I think it's HORT or Hotr or something like that), and those rules significantly change up kill team compositions to allow for exactly this. I think the main reason GW's Kill Team rules are the way they are here is to help with balance. It's very hard to take multiple different kinds of units. Having lots of options is powerful, but not every army can do this either.

That said, I think it'd be a lot of fun to try out with smaller unit sizes! Try keeping the same force org caps, but with the ability to take units in any size.

Yeah, I know of Heralds of Ruin rules, but that's way more extensive set of changes than what I was considering.

I personally like that you HAVE to buy the minimum unit size and abide by the weapon allotment restrictions. I stops players for putting a melta or plasma gun on every Marine (not a terribly OP example, but you get what I am saying).

One of the common complaints about 40k is how "messy" it is. I attribute most of this to the lack of restrictions in list building.
I appreciate and applaud GW for placing the restrictions on Kill Team as a clear contrast to normal 40K

 Galef wrote:
I personally like that you HAVE to buy the minimum unit size and abide by the weapon allotment restrictions. I stops players for putting a melta or plasma gun on every Marine (not a terribly OP example, but you get what I am saying).

One of the common complaints about 40k is how "messy" it is. I attribute most of this to the lack of restrictions in list building.
I appreciate and applaud GW for placing the restrictions on Kill Team as a clear contrast to normal 40K

KT can be abused in that regard, too, but as a general rule, this.

Note, due to Kill Team rules, the Kill Team Detachments puts an upper limit on how many units you can take. I think it's 1-3 Troops, and 0-1 Elite and Fast Attack. That means, even if you completely take away the unit size restrictions, and load up every guy with a special weapon, often times you'll just be left with 5 models in your force.

I already addressed the 'all dudes just take a special weapon' thing. In any case, my desire for doing this is to create more 'fluffy' and varied teams; to be able to include one or two Sicarians in a Skitarii team and stuff like that.

I would recommend you try heralds of ruin OP. I know you said its more changes than you were considering but they're mostly all for the better.

They take a lot of the random rolling out for example (like having to roll to move through terrain) and it helps the game a lot. In addition, you're able to bring a wider variety of troops and horde armies like orks and IG get certain units taken as fireteams (essentially tiny squads) so that smaller armies can fight them. That way your tac marine with a heavy bolter doesn't have to shoot one guardsman at a time, he can shoot 5 guardsmen who are part of a squad instead.

Essentially, Heralds of ruin has done all your work for you when it comes to the math anyways. May as well try its other rules as well. It really is a nice system. I pretty much only use vanilla kill team because we have new players and that's what they're used to.