The bullet launches out of the top of the blade. So basiclly the blade slices the carcus of the enemy then a bullet is fired into the gaping wound, sounds pretty deadly.

I did some thinking on it and I figured that the gunblade requires you to have some good upper body strenghth to use, and a heavy blade would help to, if you have a too light blade and really powerful bullet shot you better brace yourself or esle the blade could swing back and cut your head off.