This can be done by getting the flame thrower (either normally or by enabling the '/give all' code) and 'Lean' around a corner so that the enemy cannot see you and shoot your flame thrower (this will negate the 'Lean' command). Shoot puffs of fire around the corner briefly so that you are able to 'Lean' again. The puffs of smoke will not waste your ammunition but will still set your enemy on fire.
For this to work both the server and client must be running on v1.0 and it will not work if newer patches have been installed. As a lieutenant in Multiplayer mode select your grenade. Then hold B + E (Binoculars + Tilt Right) and press 'Fire' and you will be able to throw as many grenades as desired (you must keep holding B + E the entire time that you throw a grenade).