I have noted some of the same problems that dmixer has, but, playing through the first several turns of the long Case Blue scenario more than a dozen times, trying various things, I have stumbled onto some things that seem to improve things (yes, I have RTFM, but I like "hands on" learning and tend to jump in at the deep end ) ...
* As noted, the Panzers shouldn't be used for breakthrough *attacks* ... the *infantry* needs to be used to smash a hole through the Russian lines, preferably three or more hexes wide, to allow the Panzers to break through unhindered by enemy ZOCs.
The problem is that, with the CB at start positioning, the Panzer and Motorised units are not well placed for this. Perhaps if you used the "Free Setup" option? I haven't tried that one yet.
I generally find that the northern edge of the map is where the initial breakthrough can be done first, and down towards the middle, there's another site that you can set up a decent breakthrough on the first turn ... both are areas where Infantry divisions are thick on the ground along, or behind, the front line.
Other spots have lesser infantry presence, perhaps a XX spread over two or hexes, rather than concentrated in one, or with Axis Allied units, which aren't much use for these sort of attacks ... there you need to maneuver things to set up breakthroughs on turns #2 or later ... mostly by bringing in Corps, Army or OKH reserves from behind the front or the rear.
You also need to husband the Command Points of your leaders. Things is, do you expend them on supporting the initial breakthrough attacks ... which I have, so far ... or do you husband them and use them to give the Panzers extra movement points? I haven't tried the latter, yet, as I have found the AI is *very* quick to cut off any penetration that isn't firmly linked by physical units to the rear ...
Yes, I know the Germans ignored this, IRL, to an extent, and others, on other threads (Vic, I think) have pointed out that the Soviet AI will bust a gut to hold the line, expending a huge chunk of assets to do so, but, possibly, to the point that, when you crack the initial line, their defence is so compromised that it's like the breakout phase from Normandy, or the initial 1941 Barbarossa advances ... I haven't gotten to that point, not yet, as I am still experimenting with the opening moves.
I would have 100% agreed with you after the first couple of tries, but, as I have tried to explain above, repeated experimentation has led me to see the alternative strategies and tactics that I didn't initially.
* Airpower. Yes, again, it seems way underpowerered. Yes, I've seen attacks go in, quite massive ones, where not a single point of damage has been done and, whatever effect it's had on entrenchment has not been enough for maximum strength ground attacks that follow to push the Russians back.
I have begun to note some things, however.
Firstly, level bombers are, relatively, less effective in this sort of tactical ground attack role. Which, AIUI, is pretty accurate.
Secondly, where you can mass Stukas ... they *do* have an effect. Occasionally even wiping out armour units (I've seen it happen twice, to understrength ones, but that is, indeed, quite rare ... I dunno how common it was, historically, as, of course, exceptional results are often overemphasised even in historical works to the detriment of understanding what the more common results actually were).
Thirdly, AFAICT, the overstrength Italian air unit is completely useless.
Fourthly, Zerstorer units are useless ... they don't do any good as ground attack, and are poor at fighter protection.
Fifthly, combined Fighter/Ground attack units (the ones with, IIRC, the HS-129) also seem to be less useful than you might expect.
Sixthly, the combat value that Fighter units add to an air attack seem to have no real effect. Their only use is on the few occasions when the Red AF actually manages to do some CAP or Intercepts ... then they protect the bombers or stukas, and, AFAICT, nothing much more.
Tentatively, it seems, you can really only rely on the AF giving you maybe two or three hexes that you can do significant damage to on any given turn ... those hexes where you can mass the relatively few Stukas you have. And this is, I suspect, historical. You'll just have to be systematic in choosing those hexes for maximum effect.
That and, I guess, maybe you'll want to spend some points and ask for more Stukas over and above the base replacement rate, and, possibly, create more Stuka air units to boost your attack capabilities ... perhaps slighting reinforcements for level bombers?
* Artillery. Again, yes, it initially seemed as if the German units are way underpowered ... but, after several go arounds testing various things, it's not as bad as it seems.
You have to *mass* it ... as some famous Panzer general (?) said (IIRC) "Boot, don't spatter!" ... on the two really good initial breakthrough sites I mentioned above you can usually, even not using Corps level Heavy Artillery, manage two decent artillery attacks using only divisional artillery. Using these in conjunction with air attacks, even those by level bombers, usually does the trick.
But you're not going to get massive across the front barrages.
You have to pick and choose, and do so very carefully.
And using Command Points to boost the value of non-divisional artillery can be worthwhile. Probably not so much on the main front, but at Sevastopol ... there, I have found, combined Stuka and CP boosted artillery attacks can, regularly, either crack the frontline for immediate advance or, more often, force the Russians to withdraw severely depleted units to *leave* an exploitable hole in the frontline at the end of the first turn.
(And don't forget to use the Romanian DDs! They should be available for Turn #3).
So, I guess what I am saying is ... things are not necessarily as bleak as you see them to be, you just have to work out the right tactics and deployments to maximise the combined arms effects of your forces.
I hope that the above helps, anyway.
Author, Space Opera (FGU); RBB #1 (FASA); Road to Armageddon; Farm, Forge and Steam; Orbis Mundi; Displaced (PGD)