I think the area the plane covers and the fact that it wipes retreating squads is a way bigger issue than the actual damage it does.
If you reduce the area it will kill the who point of the strafe. Why not just make it another bombing run...
As I said if you reduce the damage it will not kill full health squads, even on retreat. Now if you have squads with 1-2 guys or 50% below HP then there is a huge chance they can die. If they die you can only blame your self for not retreating them early on.
2nd option could be:
The way I see it is strafe should do 25% damage of the given units health at the moment. So if you have full health squad 100% first pass would do 25% of that and bring it to 75%, second pass will do what is doing now(annihilate). This way no full health squad will ever die, but don't stick around to find out for the second pass.
Warning: squads down to 25% health will die on the first pass
@computerheat
Question is why are flares doing damage in the first place? It should be a cheap early warning system for the soviets... not another "mine" in their arsenal.