Morale Issues

[hoplitis]

Even seriously depleted AI units have a chance of rallying (so do your battered units, too). As soon as they do, they'll do their "normal" business as usual (move towards closer objective hexes, OP fire your advancing armor, etc). Even crews from destroyed vehicles may harass you and cost you an unguarded objective hex. It may be annoying but hey! do you think that "clearing" a battlezone is easy? Mopping up retreating infantry with armor has its risks! (sounds more like an "infantry" task)
Also, there are numerous posts in this forum concerning these issues (and in depth). Do a search!

[Mustang]

It is kind of ridiculous, though, that an enemy will keep fighting after 90% losses. Any unit that has been cut down from, say, 9 to 2 men should be permanently routed.

And it seems like you overestimate the effects of surpression. Ocassionaly, you will pin a unit for a long time, but usually the unit will rally after a few turns and return to normal. Even retreating units without too much supression will Op-Fire.