First of all i like the Alon in the Dark series. And games like Dark Sector, Wanted: Weapons of fate or Bionic Commando.
This one was made in 2008 so it looks a bit like them. And the ideas the developers had about this was ahead of its time.
Yes you need to burn the enemies. But you can do in many ways:
-beat them up and drag them into fire
-use the gas from a tank and blow a car along with them
-combine stuff to make explosive bombs. molotov coctails etc
-use the lighter liquid to pour it on the ground and light it on fire
-do a spray+lighter combo!
Dont listen to people that say killing the enemies using fire is stupid. They just didnt had enough imagination and will to chceck out all of the combine options etc.
The inventory, healing, fighting is awesome and really one in a kind. The only downside is that the game feels rushed and a has a lot of bugs. For the best one buy the ps3 version