I think first of all the flamethrower like so much military technology wasn't ditched because it was illegal or immoral. But rather giving one soldier a 30 kilo backpack that let him squirt five for about 30 seconds, wasn't practical. Not when you could achieve a similar result with a WP grenade, HAFLA 35 or similar weapons.
The flamethrower would provide some fairly unique problems for the project. First of all it's incredibly bulky, where would you even store it in a crowded V-150? In any kind of firefight your team of 6 shooters, has got one member with a weapon with limited ammo, pistol range and a need to be protected. Finally how would you train team members on it? You're here to restore civilisation, help people, come in peace, now here's a weapon that allows you to kill people in the most hideous manner known to man.
I suspect flame throwers were a highly limited issue weapon, used only for specialized roles by trained MARS personnel. Perhaps they had use for clearing heavy brush or snow banks? Maybe for taking on bunkers used by deranged survivalists?
Of course it could just be that BEM saw the future with Night Children, Blue Undead and killer plants and felt it was a more useful took m16. If your campaign doesn't have such scifi nasties maybe just delete it?
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