The only times I saw people swinging at invisible nothings was in Burning Crusade when they had goggles on and were fighting spirits that only they could see. In which case, I could heal/buff them but not aid in attacking.

For the characters out of phase with me, I don't see them at all until we occupy the same point in the storyline (while in the area the phasing applies to, everything is normal elsewhere). When grouped with someone out of phase with you, there is sometimes a little icon next to their party bars that lets you know they're in a different phase from you. But I haven't tested it fully.