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Have we reached any consensus on the issue of whether the Reduced Blizzard option is more realistic than not? Is "Regular" Blizzard more historical and realistic?

There is no consensus.

But if you play against AI as german, help the AI by using full option.

Regarding number of casualties and losses of equipment,I would say full blizzard makes more sense. Regarding morale, cv and supply penalties, full blizzard is too extreme. You get huge penalties as germans for several months, which seems too much for me. The reduced blizzard scaling of the penalties as time goes by seems more natural.

There are lots of considerations, so, consensus may be tough to achieve.

With regard to German losses during the First Winter of the War in the East, I can cite by memory a couple of facts: 1) by 30 Nov 1941, 6th Panzer Division, equipped primarily with Pzkw 35(t), had zero tanks ready for combat; 2) in early 1942 when Das Reich was preparing for withdrawal and refit, one regiment had 35 men ready for duty.

So, the losses were catastrophic during the First Winter.

I guess that First Winter rules may still be tweaked.

Regular blizzard is far too mild in game compared to history. After a supposed "harsh" blizzard German army is always stronger than in the beginning of winter: more men and more tanks; the morale is somehow lowered, but quickly rescued in few attacks in march in snow weather.

IMHO mild winter option has nothing historical but can be useful for balancing game: I.e. if Germany player is a newbie and Russian player a veteran.

Historically the Germans were pushed back primarily because of over extension, not just the cold weather. All along the front where the Germans were dug in they held with little exception. In the game, with full blizzard, the germans must withdraw throughout December along the whole front or be destroyed.
Most players build a defensive position late summer around 8 or more hexes back to plan for this. Mild blizzard is more realistic. Just add the Soviet attack bonus to help balance things out.

Yes, it is more of a play balance tool, and essentially all the previous posts are correct. Perhaps in future there can be increased degradation of Axis capacity of truck, supply, medical recovery, a defensive bonus with with high casualty penalties but ability to hold the line but look like crap come spring 1942 kind of thing. The problem is we know Winter is Coming.
Of course, you can always stick the Finns in Leningrad, then go back to garrison in the west, and start again in 1942 fighting fresh. After all, it is all about keeping Berlin for that marginal Victory in 1945

Full fat blizzard leads to a more 'historical' result in actual games IMHO. Mild blizzard enables Germans to restart their offensive in Feb after suffering very little in Dec + Jan if they play their cards right. See my AAR vs Brian for example of what happens with mild blizzard and no 1:1 to 2:1.

For once I disagree with DV. 1:1 to 2:1 isn't nearly as useful as it was given that R losses even when they win are much higher than they used to be, and G losses much lower.