I really think RE are the issue here, they should be more relevant that early. I think the issue is clearly the poor fighting capacity of Rear Echelon, the only squad they may have a chance to win early game is the pioneer squad if RE are in cover and Pioneer need to cross negative cover to close the distance.
While they lack raw firepower, they make up for it in terms of rate of fire. For example - REs are your go to hard counter for kubels. There should also really never be a situation where you are trying to fight REs vs sturmspio or pios at close range. They should be seizing a point, building a tank trap (green cover) and using the time to bleed whatever is charging them. A situation where a charging sturm bleeds 1/4 health and forces your rears to retreat - is a win.
Offensively, a common tactic early game is to push your RE + 1 rifle ontop of a volks squad. You'll come out significantly ahead - forcing a retreat and erasing the OKW squad advantage before your LT comes out. Also, do know 2 REs will beat a volks squad straight up at point blank.
They are also excellent for holding key points such as buildings before flamers show up. Any attempt on pushing the building will result in enemy model losses more expensive then your own.
Lastly they can build fighting positions and get a free automatic grenade whilst in them - forcing your opponent to abandon cover.
OKW is more brutal. They can simply rush you with a Volks squad and Sturmpioneer to force you off. If you happen to keep your cover they can simply deny it to you with an early flamnade getting the upper hand on the fight.
While true, this only emphasizes the need to play a defensive game early utilizing green cover. A sturm squad & volks squad charging a rifle and RE in green cover will lose most of the sturm squad before getting close enough to negate cover, never mind that while moving they are applying a fraction of the damage they would normally.
The volks in this scenario who throws the flame nade is wasting munitions assuming you simply move out of the way. By dodging the grenade you negate the damage of the model who has to throw the grenade while still applying your own. This also means he has wasted munis and gives you a weapons upgrade advantage over him later.
Worst case scenario is that both sides units are beaten up relatively similarly and need to retreat to heal. Best case, you've likley forced a retreat with most of your RE left and can keep capping whiel healing your rifle.
If you're facing kubel spam, REs high rate of fire in buildable green and low reinforcement cost will significantly blunt the effectiveness of the OKW strategy.
Ostheer have pioneer giving vision bonus, super early HMG and Grenadiers. If it happens that one of your riflemen squad is catch by the HMG, you are in numerical inferiority. Even if I flank there is usually the next grenadier squad reaching your point around the same time invalidating the flanking manoeuvre. RE are also useless for flanking, They may simply do zero damage... I had once a RE squad closing too much and losing vs the HMG support guys :/
Unlike OKW, Werhmact does not have a combat squad numerical advantage over USF. They are defensive in nature and you can simply just cap the map where they aren't, biding your time until you get tools to deal with their entrenched nature.
What you're illustrating here is the need to build a mortar early game, or get early grenades. Do not contest Whermacht MGs without the grenades upgrade. Unless you lind up a sick flank. REs work for flanking, but don't get on top of the MG as the supportcrew carries MP40s, keep about 10 range.
A mortar will allow you to force an MG to move, or negate its effectiveness/position with a smoke round. In this situation you have a hard coutner for one of the OST units, and two we
Grenade upgrades will allow your RE echelons to hard counter the MG with a smoke grenade and allow your riflemen hand grenades to threaten insta wipe if the MG are in the open, or get fucked in a garrison.
I have the feeling USF is again in a huge backstep early game vs OKW and Oshteer.
I disagree its a huge backstep, they perform very well given the immense tool set they possess. Grenades, mortars and fighting positions should allow you to hold your ground against any early game aggression whiel you transition into the mid game.