I agree that you shouldn't have to press M. If you hit teammates 5 times in quick succession your intentions don't matter. Whether or not you are doing it on purpose, you're basically giving the other team a two man advantage (you and your target are both screwed over).
I think that only the person who hits a teammate should get warning text, with automatic reporting. It feels like the "[player] hit you, press M to report" only makes people hit back in revenge if anything. I have accidentally hit teammates and instead of pressing M (which would have put me at 1/5 team hits) they turn around, find me, and beat me to death. If you aren't expecting it they can easily hit you more than 5 times before you start spamming M to stop them.
I've also had clanmates take turns hitting me, sometimes for no reason or because of accidental team hit. I let admins know on the server, but sometimes there's no one to enforce the rules.
My suggestion is this: if you hit teamates you get an invisible marker on you, just like when someone reports you in the current system. Each marker would expire after a set amount of time. Only you get alerted when you receive a team-hitting marker. If you honest to goodness hit three teamates by accident over 10 seconds of intense fighting, you will see that and take more caution or get kicked when you do it again. If you only hit people on accident every now and then or panic and hit a teamate after turning a corner, it won't be a big deal.
It just seems like the people who team hit on purpose get away with only 1 or 2 [M] strikes against them because they catch people off guard who are trying to play the game as intended. And the majority of [1/5] teamwound messages are truly accidental one-off strikes. You never see that player get reported again for the rest of the map.
Just my 2 cents.
edit: I disagree about heavy damage making you instantly get kicked. One accidental overhead swing or arrow/bolt onto a teammate's head would have you (and your precious multiplier) gone before you even know what you did.