Can a weapon explode in mid air or does it have to hit an object /terrain first. The only instance I can think of is the remote rocket after it's "energy" runs out but then again it doesn't really explode. So yea anyone have any insight on this issue?

Maybe you could set up it's .odf to be similar to that of the timebomb? From a quick check, some of the properties are different between grenades and mines/timebombs are different and they have different class labels, but if you changed some values like the MinStrength/MaxStrength, added a ShotElevate property, and gave it the grenade toss fire animation, you might be able to make a timebomb mimic a grenade that explodes mid-air.

I don't know if that would actually work, but it's all I can think of.

i did some searching in the forums and found this

StartTimerOnContact = "0"

i'll try it out and see if it works and get back to you

Yes that line works perfectly fine, the grenade explodes in the same time it would normally without the line on the floor.

Any weapon that can "expire" midair (non-gravity-affected weapons) can explode midair since a property of an expiration is an explosion. I think shells can too, but I don't know offhand.

Shells can. Yes.