I have just tested this quicky save included & cant see a problem look at the results
Arty USA Paladin vs Challenger One
Fired 4 Paladins one each at tank in centre of group.
All Paladins used 0.5 so only one shell.
Results using one shell only
In target hex 2 destroyed 2 immobile.
2 Hexes away 1 out of 10 immobile
3 Hexes away no effect.
So 4 shells gave 2 kill & 3 immobile results.
Game saved here.
If carry on & hit at 0.0 so 4 shells the carnage is far worse from watching.
Tanks in target or adjacent hex stand a good chance of being damaged or destroyed.
Those 2 hexes away stand a very good chance of nothing or minor suppresion.
Obvious conclusion keep them 2 hexes apart & wont do much damage, to me this makes it a deterent forcing you to keep dispersed therefore making combat maneuveres harder.
Yes it covers an area of 5 hexes across when it should really be 4 & a bit but the chances are will be unscathed in outer hexes.
If you are talking MLRS first result I found on You Tube for TOS-1 as you mentioned it earlier
http://www.youtube.com/watch?v=YgJOEtSMhdc
As you can see quite a large area I would say the problem is more people use them far more often than they really would be due to cost etc. But thats true of most things from best IFVs MBTs attack helos planes etc.