The 1 guy alone in the back no retreat strategy ...

[tinkthank]

This does not seem like an exploit to me, since there are pros and cons.
The con would also be: a single militia may rout without being hit at all when he just sees the enemy coming (I am sure you have seen this happen). Also, a single militia is also still easier to wound or frighten than a group of militia.
Similarly, a group of militia may actually slow down incoming enemy troops at least long enough for them to get killed; and if they rout, the enemy will usually follow them and try to kill them all. A single militia will just get mowed down and that's the end of him, and will not even slow down a group of approaching infantry or cavalry at all.
Remember, a commander can have only 5 squads max, so you cannot infinitely spread out your troops anyhow.
I think that spreading out troops is not an "exploit" which need be addressed.