Given the low number of participants to this thread, it seems that few people actually play with wadi/gully or, if they do, they do not have any problem with these rules.
I'll try to be more specific.
1. By the 4th Ed Terrain Chart rules, a unit in a wadi/gully is one elevation below adjacent terrain (-20m). This is wrong, I think. A wadi/gully often is a dry river bed and the average depth should be about 3-5 m. That should be ground level with automatic Dug-in position. Note that Dug-in status does not change the combat modifiers (except for bombardment).
2. See Fig 1
What's the use of that gully along the 20m hill line on Crete map where the SS HMG stands ? If the SS HMG can't be dug-in on the edge of the gully (and the edge of the slope), it's a non-sense. Try to apply 4th Ed Terrain chart rules to the depicted situation: the SS unit is in a hole (-20m) on a 20m high hill = 0 m ! However, there's a slope in-between. What about the LOS to the US HMG ? It gives me some headache...
Generally speaking, any unit should be able to adopt a protected hull-down position on the bank of a gully, with a clear LOS all around. It is not the case if you put that unit in a -20m hole.
See Fig 2
When the Black Prince tank moves in 1309, the cost will be 2/3 MP (bridge) but if it stays there it won't be able to fire on the PzIII (no LOS from the hole !)
3. The Black Prince tank being in the gully in 1309 then moves to 1209. Cost is 3 MP, exactly as the tank was actually entering the gully. To my sense, the tank is "following" the gully line; cost should be 1.5 MP (clear).
Movement costs must be different if following a gully line.
4th Ed Terrain Chart
Mvt: 2 (foot), 4 (Mot), 3 (Mech) Entrench allowed Combat Mod: -1 DF, -1 AT, First Fire Location/spotting: -20 m, Limiting Terrain
I propose the following change
Mvt: same (except if following gully) Entrench allowed Automatic Dug-in Spotting: Limiting Terrain