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RE: A lack of realism in Panzer Grenadier
Larry, I just happen to have the 2nd Ed HQ rules in my project folder. I assume it is similar to the 1st Ed version.
15.1 Headquarters (HQ).
In some scenarios, headquarters are present as units. HQ units indicate the morale of a side's forces. The numbers in white/red in the lower right-hand corner of the HQ unit correspond to the full/reduced strength morale of that side's units specified in the scenario instructions (see 14.0).
The loss of an HQ unit is catastrophic; no friendly unit within 15 hexes of where the HQ unit was destroyed may move during the remainder of the current turn or during the two subsequent turns.
I suspect that Ottavio was thinking of more a "panic contagion" rule. Perhaps like was in Battles & Leaders, an ACW wargame from Yaquinto some time back.
... More and more, people around the world are coming to realize that the world is flat! 
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