Alright, after fiddling around with your example code, I've almost completed the mouse look portion of my project. However, I've reached a block of sorts...
While I can look up and down (and all around the Y axis, including behind me, but I can fix that after I finish this), I cannot look side to side, and my crosshair, while in the center of the screen, jumps to the right whenever I fire, so that I'm actually firing about half way to the right side of the screen. It stays in the center, jumps when I fire (you can't tell unless you fire a lot, as it's too fast to really register if you just shoot once), and then is immediately back in the center. Here's what I have pertaining to this, lemme know if I forgot to give you something.
position mouse screen width()/2,screen height()/2
xrotate camera ( camera angle x()+mousemovey()*0.3 )
yrotate camera ( camera angle y()+mousemovex()*0.4)
set camera to follow x1#,y1#,z1#,ay1#,1,2,1,1
x1#=object position x(You)
z1#=object position z(You)
y1#=get ground height(1,x1#,z1#)
ay1#=object angle y(You)
position object you,x1#,y1#+0.1,z1#