From the start, let me say that I don't care about VPs, they only have a tertiary interest for me.
As such, without taking VPs into account, is it really all that worthwhile to destroy allied units?
For context, I'm playing the 4th supreme command scenario and it is currently the winter of 1943-44. The Allies launched a major landing in the sole of the Italian boot without doing a landing at Salerno. I had been busily setting up 2 defensive lines prior to this: one south of Rome near where the Gustav Line was historically and another south of Foggia along a river and including Naples. I rushed my forces to the Foggia line and held that point against the initial allied attacks. I then realized that the terrain in this area was actually ideal ground to launch a counterstroke to try to defeat the allied landing in a crushing and decisive fashion. As such, I maintained my southern line in the hillier area east of Naples while abandoning the flat area along the river south of Foggia, hugging the hills going north from this line and with a small force just south of my second line to contain the allied advance at the edge of their range. The allied Ai jumped at this opportunity and advanced a large force into this trap and, luckily for me, left a single US airborne division to hold the vital hinge of their advancing forces. On my turn I then attacked this airborne division with my available armor and mechanized reserves and succeeded in cutting off the allied forces. Over the next 4 weeks I destroyed these allied units, totaling 300k troops (mostly British and commonwealth)~3k artillery and ~2k tanks. I thought this would be a significant setback for the allies but there seem to be just as many allied forces in Italy as there were before, the allied OoB shows little in the way of decrease in either men or material (and I went back a few turns and set the allies to human and check their reinforcements tab and there were not substantial reinforcements to explain the discrepancy between the losses and little change in the OoB view) and, to top it all off, I noticed that divisions I had just destroyed 1-2 weeks prior were already back in the line opposite me, seemingly already brought back up to strength. Although I only suffered about 20k casualties and maybe 300 tanks, I did lose the fortifications I had built along this line and trying to hold it against determined allied attacks to try to relieve the surrounded forces did wear down my armored reserves. So while I might have hurt the allies more by surrounding these forces, I find myself in more or less the same position I was in before this effort but about 20k troops and 300 tanks weaker than I was before and with my forward defense line now untenable where before I might have been able to continue holding it comfortably for months with the same or fewer casualties.
I know that this game is likely beyond the point where many significant gameplay changes are being made but I just think that the western allies units should either be perma-destroyed (like the Soviet units in WITE) or frozen for a couple weeks (like the Germans in WITE if I'm recalling that correctly). Otherwise, from a non-vps based perspective, there doesnt seem to be much tactical or strategic value to making conscious efforts to destroy allied units when a strategic defensive would likely ultimately be more cost effective in the long term.
On a final and unrelated note, I noticed that allied units don't seem to surrender? According to the battle reports its says that they "retreated" and also they don't seem to suffer total losses, i.e. a 45k stack might only be shown as suffering 30k casualties when the stack is annihilated along with guns and tanks that go unaccounted for in the reported losses.