I think B-G's suggestion are a good starting point, but you have some points there that surely must be considered to make this feature useful, as well as hard to misuse against AI and other players -- both is surely possible.
ORIGINAL: 76mm
First, regarding the reaction range: I think that 40 miles is awfully far for a rifle div in 1941. The question is not only how far the unit could move, but what C3 capabilities it has that will allow it to determine where an enemy is, and then react quickly in a proper "intercept" location. At least in 1941, I just don't see that as being realistic. Maybe one hex, or more likely, none...
Was my first thought as well. In reality it would depend strongly on situation awareness of the commanding element, i.e. what "recon value" of the approaching unit is available. For an infantry formation I would think it would already be a quantum leap to have 1 hex reaction range, i.e. direct spotting. If considering Cavalry, Mech or Amored, one could think along the lines taken in WiTP with the reaction range (0-6) setting for naval formations. But also here I would set a much shorter cutoff, perhaps 2 hex if sufficient MP are left, and for the 2nd hex have a lower probability to react? Linearly or exponentially lower, whatever the exact mechanics.
ORIGINAL: 76mm
Second, if you allow that reaction is realistic and useful, the fact that only one unit could react per hex is also kind of odd--presumably any commander that could figure out where the enemy would be would send all available combat power to that location, not a lone rifle division, tank brigade, etc.
That is a tough question. Any unit with a ZOC hex being equal to the hex to be entered by the unit should react to that, with a certain probability calculated from the rules and factor discussed above. Why have one react and not the other? Hmmh, should there be a fixed rule, basically implying that all units would coordinate perfectly and only move together when the detected enemy CV is much higher than that of a single reacting unit? I would suggest that this be one factor, and another that again there be a dice roll depending on the unit readiness, moral and leader qualities whether they will coordinate successfully, or wastefully move together on a weak enemy, or failing to coordinate on a strong one. Some friction again...
ORIGINAL: 76mm
Third, the sistem would inevitably be "gamed", in that German players would figure out how to bait the reaction forces to uncover the true avenue of attack. This would be realistic enough if the player were determining how to react, but having the AI do so would almost certainly result in clever German players taking advantage of it.
That indeed is a big problem. With the reaction setting I would used a different design, i.e. not just Hasty attacks on a unit that has entered a ZOC.
I would allow for 3 different order settings (besides the competing attachment as a reserve for a higher HQ): "Hold tight", "Blocking" and "Countermoving". This would introduce some uncertainty as the player would have to use it carefully, and the opponent never could be 100% sure what might happen although he of course could guesstimate a bit from what he knows about the unit and leader qualities.
(i) Blocking: Once an OPFOR unit is selected to enter a hex in the ZOC, the unit exerting this control of that hex could get a dice roll to enter that hex first IF the entering unit was sighted or well reconned in the last turn ("sort of assuming its axis of approach was tracked by air recon or so").
The advancing OPFOR unit could get a special dice role, depending on whether the reacting unit was identified before, and its known relative strength, whether it will perform the targeted move. If both forces enter, then there should be a special type of engagement, not one following standard rules of deliberate or hasty engagements, but a Meeting engagement with represents that both sides come up piecemeal/unordered/in marching formation and, thus, a like light, sometimes heavy fight ensues in which no side has some initial benefit.
(ii) Countermoving: as described by B-G above, making a Hasty attack into a moving opponent formation, thus also representing a bit that the opponent unit is in march and not prepared to defend, and losses will be a little worse than in case that unit would be waiting in a defensive posture.
Perhaps the Countermoving could also get a dice roll making it a meeting engagement instead.
This is harder to game (and since it is based on probabilities, can only gamed with a certain chance, else the gaming fails), but as always with anything in a game, it probably can also be broken by some inventive players...
ORIGINAL: 76mm
Fourth, I still don't see the benefit of a 1-8 rifle division conducting a hasty attack on an advancing panzer division. What purpose would it serve other than incremental fatigue and supply costs for the Germans? Now if they could react and then dig in to level 1 right in front of the Panzers, that might be helpful, but again it doesn't seem particularly realistic.
In general, I think I would rather decide where to put my ants, dig them in as deeply as possible, and hope for the best.
All of this being said, some kind of reaction would be more realistic and helpful for the Sovs later in the war, although even then I would probably restrict its use to tank or cav corps with morale/experience over x/y and with good leaders. But by this point in the war, a reaction phase would generally be of more benefit to the Germans than the Sovs.
I think it is already a very sensible concept B-Gs presented -- especially if I think of why German or Allied lower echelon leaders where so much ahead of the Russians in the early, why the concepts of Kampfgruppen or ad hoc combat groups, and the blitzkrieg tactics worked so well, or at all. In a good part because the subordinates were trained to exert initiative and react to unforeseen circumstances, rather than continuing to follow strict orders or calling a halt. So clearly the unit quality (i.e. the abstracted moral) and the leader values of the unit must play a critical role when determining whether the unit reacts to a sudden threat.
This would be more beneficial the better the training gets, and the leader are, so the Germans will always benefit from it by being able to counter encircling or breaking-in units. The Soviets would benefit from it 43 onwards more and more, but have poorer chances to gain much from it in 41 and 42, which is exactly what it should (i.e. make Minsk- and Lvov-like pockets possible, but not without at least a minimal chance of throwing some speed-bumbers into the avenues of approach and thus perhaps delaying the closing of the pockets by a turn, and also costing both side some battle losses). /IF/ it could be made work like this without screwing anything else including AI up, I think it would be a worthy advance.