As a change from suggesting complicated mechanical effects and unusual ways for it to apply damage, a set of simple stat changes that would turn it into a genuine damage dealing weapon, retaining its pulling effects as an optional/opportunistic gimmick.
Firstly – Reduce reload time from 16s to 8s, doubling its damage from pathetic to still pathetic and allowing more chances to hit the target.
To retain the same pulling capability/proportion of time reduce the rope duration from 8s to 4s.
Secondly – Increase projectile speed to 335 from 120 making it easier but not easy to hit targets outside point blank range , reduce projectile life to 2.388s so the 800m range is retained and ensuring its not possible for the rope to still be attached after the reload is finished even with maximum airtime from the harpoon.
With these changes the harpoon would now be reasonable to score hits with and might be useful against a squid VIP/Skyball carrier to stop them escaping. The damage however is still pathetic, compare 179 armor damage every 8s (using charged even) to 250 repaired every 9s from a mallet.
Third step – Increase flechette damage to 220 from 80 making it actually relevant, a charged1 harpoon would then deal 535.6 damage to a balloon, too much to ignore but not enough to supplant the light carronade or make instant balloon pops possible2. For comparison the light carronade deals 1008 balloon damage in 4s and reloads only 2s after the harpoon.
Fourth step – Increase Piercing damage to 130 from 80, a charged harpoon would then deal 325 armor damage, enough to actually exceed mallet repair. Compared to the Gatling dealing 1086 damage in just under 10s the harpoon then does 650 from 2 shots in 8s. The ability for a charged harpoon to one-shot the squid's armor would be a concern but is likely to be removed by upcoming changes to the squid itself.
With these changes the harpoon would become a relatively weak3 but versatile short-medium range damage dealing weapon, click to reel would be an advantage allowing self-disorientation to be avoided until an opportunity for ramming and/or disrupting the target occurred. Having the harpoon be at most a 50% damage loss compared to another weapon choice rather than 90% would also allow for more variety and experimentation in uses for its pull force.
This would take almost 0 effort from the dev team to implement, a few changes to a spreadsheet and maybe a week or two of inclusion in testing sessions.
1 – Damages are all based on using charged rounds because it has no drawback at all on a one shot weapon excepting that its not lesmok.
2 - Neither double charged buffed harpoons or a single buffed loch harpoon would instantly pop a balloon, 3 harpoons or 2 loch harpoons doing so is I think fair enough.
3 - Compared to other weapons raw damage output.