No offense but your issues with German infantry seem relegated to how you are using them. Trying to force PGrens into a role they weren't designed for because "they have Assault rifles they are supposed to be pre-patch shocks" does not mean they aren't effective. Besides, from a realism perspective, Assault rifles are most effective at medium range. They are more accurate at range than sub machine guns, but still excel at close range.
As for your comments about Grens dying like flies on retreat, this is not unique to Grenadiers. They don't have retreat modifiers that make them more susceptible to being chased down. They can be hunted down on retreat by an m3 just as easily as a conscript can be hunted down by a scout car. Grens are extremely strong at range, and I almost always upgrade at least one, usually 2 with LMGs and they are absolutely beast.
I agree with the comments about Pgrens have a role overlap with grenadiers, but I find they are useful for their utility. I will usually build at least one squad and use it as an AI unit along with my grenadiers until soviet armor starts rolling out, at which point I upgrade to shrecks and they become extremely strong when kept near a pak. The two together prevent your paks from easily being flanked.
Ostruppen? Yeah I agree they are pretty much worthless.
Ass grens have their use, but I would not call them the best German infantry unit. That belongs to Grenadiers. They are only effective at very close range and assuming you know how to react to them, are pretty easy to deal with and expensive to reinforce.
I know how PzGrens are "suposed to be used" these days, but I disagree with the concept. This I wanted to emphasize. The idea is that germans have to few infantry unit types and the ones existing are generaly crap and harder to be kept alive unlike their soviet counterparts. I observed while playing with soviets I keep my infantry alive much better and the phenomenon is quite similar while playing with AGs. That is why I believe that even if an infantry squad is crap and needs to fight upclose, the squad size still matters. A larger squad will make game somewhat easier for you.
Coming back to infantry units quality, biggest AGs problem is their lack of AT capability but they have two other features who recommend them as the (maybe) best german infantry. They kill everything quite fast except shocks and their assault grenades, when properly used are a perfect tool for smashing infantry, hmgs, clear out buildings, etc. They are the ONLY german infantry fit for flanking and for an agressive play style due to their rush ability.
Now don't get me wrong about grens. But it's a diference between the sharpest infantry unit of a faction (elite unit) and the back bone unit of that army. Of course grenadiers are irreplaceable, but they are the back bone of the army. I was comparing the top infantry from both factions. If we think at grens as the best german faction infantry, then the game is hardly unbalanced because I would have to compare them with shocks.
Still, I really think it's a problem with this lack of infantry choices at Ostheer compared to soviets. There should be some crack infantry units similar to shocks in some german doctrines, maybe not as good as the shocks, but close. Stormtroopers, something.