I agree with Von Hindenburg, using AP points to delay withdrawals would make more sense, and the Axis has an overflow of APs, anyway. I completely agree with the op, though there is one thing that I don't if the game takes into account. Basing myself off of Rauss's book, German generals constantly improvised ways of drawing off more manpower. These included using HQ staff, dismounted panzer units, artillerymen, and air base crews as combat units (to hold sections of the front or as reserves). Many of the changes that began as improvisations would latter be included formally in the eastern front. Now of course improvisation is not limited to any side in the conflict, but the Wehrmacht was more receptive to improvisation than any other army of the time.
What I suggest (and I apologize if this is running away from the original post, but hefe's last part reminded me of this) is that German formations be allowed to canabalize their own organic reserves in order to maintain combat effectiveness. For example, if a division's combat power goes down to 50% of its paper value, it organically converts some support squads into rifle squads. Or if a below set strength division is attacked, it converts some support squads into rifle squads to try to boost its combat power.
I also find that something similair is desperately needed for panzer divisions, as most of the crews of knocked out tanks, particularly in 41, kept fighting. By the winter many of the panzer divisions had become de facto understrength infantry divs. But this is going waaaay off topic.