Knife Fighter? (3.5)

[Keld Denar]

You already CAN make iterative attacks in a grapple, I'm fairly sure..

This is correct. You can also trade your iterative attacks for almost any of the grapple actions mentioned in the PHB, including pin your opponent, damage your opponent, attack your opponent with their own weapon, attack your opponent with your weapon, or a few other things. The only actions that you can't use with your iterative attacks are things like move the grapple.