Trying to get back on topic.
Damage is increased by about 4,5%. This means that you lose about 12,9% damage if the first model drops instead of the 16,6%. Really nothing huge, but okay. Not enough by far for saving PPSh Penals from being UP.
PPSh Penals just show how important RA, stealth and sprint are to CQC squads. MP40 Volks are the only second CQC unit lacking all three, but at the very least they come with smoke on top of the normal Faust and incendiary that Volks carry and better RA when vetted.
PPSh Penals sit somewhere in the middle.
Too large RA for being good at assaulting, no real utility, no ATG backup so you'd still need PTRS Penals at some point. They even come with a commander that gives you PPSh Guards if you want, that do everything PPSh Penals can do but better.
Dont Penals and Volks have the same RA when vetted(according to march 2021 patch notes), both come out to a target size of .77.
Cost from 300 to 290
Reinforce time from 5.4 to 4.5
Veterancy 3 weapon accuracy from +30% to +20%
Veterancy 2 Received accuracy from -15% to -23%
So at VET1 VG is slightly better, VET2 Penals become a beast and VET3 Penals are still better due to increased ACC. Like you said the biggest difference is lack of utility, adding OORAH or smoke nade would make it an actual useful upgrade.
I also agree with your other point, there is no reason for this commander to give PPSH since Guards get it for free and can cloak.. Like I have said in other threads giving Penals access to the PPSH upgrade would make Penal starts viable with more commanders.
Soviet Reserve would give PPSH Penals, Commissar for field healing and AT/MG without backtech.
Advanced warfare would give you radio intercept so you can hold off on PTRS upgrade as long as possible, PPSH Penals, T3485 and the ability to repair them with your penals.
Finally Conscript Support could be renamed to Infantry support with PPSh, KV1 with Penals able to repair and Rapid conscription to keep up with the Assaulting theme of the commander/Penals.
Each commander also has an ability arty/offmap/skill planes to make them attractive for team games. I know there wont be a patch but hell it would be a nice MOD to play so it isn't the exact same commanders everytime.