I've never actually played either one against somebody else, but when the two wrestlers lock up, both people input a command and I'm pretty sure whoever inputs it closer to a certain point in the animation wins the grapple and performs their move.
In Fire Pro, there's only one grapple state (collar and elbow tie-up) that happens when the two wrestlers collide with each other, and the reversals are sort of random based on how much damage you've done. If you try a powerbomb as the first move of the match and win the timing battle, the other guy will usually reverse it into a back body drop/hurracanrana/whatever.
In KOC, one wrestler initiates a clutch and the other player has to win the timing battle to reverse it. So you'll go into a suplex clutch which is just the front facelock with his arm over your neck, and then you'll both bend at the knees, at which point you input a command for a vertical suplex/brainbuster/etc. If they win the timing battle, depending on what button they press they'll punch you in the gut or do their own vertical suplex to counter you.
Against the CPU, if you get the timing right you'll win pretty much every grapple. I'm not sure how it works with two human players that have good timing.