Instead of melee, let's say it was a secondary alternative like the flaregun.

Primary-fire ignites enemies in a short range in front of the user.
Alt-fire throws it like a grenade, exploding and igniting enemies. (Like a stronger scorch-shot)
+Allows the user to see the health of friendly engineer buildings.
+Can be used on friendly engineer buildings to repair them.
-Takes time to recharge after being thrown.
Uses ammo for metal.

The Pyro using a small welding torch as its secondary to help repair Engie's buildings, just like the homewrecker can remove sappers, would just fit so perfectly.