I dunno with this one either. One thought would be, yeah, they're still in cover. Frag grenades would negate that. But then the thought comes to mind that they're already involved in the melee and would be thinking more about that than using the cover.
Then comes the thought that the second charging unit wouldn't be using their frag grenages anyway, otherwise they'd hit their comrades (if they were the same force!).
But I guess I would have to say yes, cover is cover and if you are in the trees and someone charges you, a tree is still going to effect that charge, whether you are fighting someone else or not.
So, cover: yes, frags: no.