The Small Map Mod does get the AI into action much quicker now. With the settings you describe, the battles can be short but fast paced. I'm starting a Single Player Campaign as the Germans on the Small Map Mod to see if any problems exist from that perspective.
Having completed only two battles so far, I did notice the Cassino map to be chopped off on the right hand side. This didn't affect the battle, instead the reports block was positioned in this area, actually freeing up some game map in the lower right hand side.
You mentioned the artillery as OP, but in the battle on Cassino map, you can see that the AI had to drop their artillery on top of it's front line troops. This allowed me to focus my artillery elsewhere since the AI front line troops had been suppressed already.
In my limited experience, the AI does have to attack which in turns creates a more intense battle. Battles could last longer than 15 minutes if you don't opt for the Truce, but they are quick indeed. Deployment of your forces is important though. Artillery can be OP, but more so when the AI drops theirs on its own soldiers. Since I don't have armor yet, my soldiers are doing all the killing. :)
Point number 1 - No force morale is good in that it does speed up the battle. However, one should be cautioned not to get into a "hide and seek" situation where the AI's force morale is low, but can't muster an attack. At this point, the AI will just try to capture victory locations. See my upcoming video titled Gateway To Caen - Battle 1 - SP-SMM for an illustration.
Point number 2 - Battle groups should be able to withdraw, only if they have a map to withdraw to. Otherwise, they should be removed from combat.
Point number 3 - Yes it would be great if the Germans had more tanks, or at least an option to have more tanks. For some, the challenge as the Germans is to see if they can hold out longer than their historical counter parts. For others though, seeing what the Wehrmacht can do when properly outfitted is always going to draw the "what if" scenarios.
Point number 4 - There should be an option to individually select the units and as you state, keep it within the GTC platoon structure. It seems that's the developers were straddling the fence on this issue and opted to remove the individual selection.
Point number 5 - The player, not the AI should decide which units get replenished and which vehicles get repaired.
Point number 6 - I think it is possible to change the data table of the game to where more mortar support is available. At least I know that was possible in earlier versions of Close Combat. But that would be an excellent addition to your Small Map Mod.
I look forward to version 2 and hope to see you on the battlefield.
"The supreme art of war is to subdue the enemy without fighting." - Sun Tzu