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In Scenario 4, we are given command of both US and FRG assets including several Kraka ATV units. The scenario begins with moderate to heavy rain and low illumination. While the TOW-equipped ATVs have a decent range (2 hexes), the Milan-equipped ATVs only show an effective range within their own hex, making them effectively useless until dawn in the scenario. Is this difference between the two subtypes intentional (due to equipment differences) or not?

This is due to equipment difference.
In the West-German OOB, all TOW equipped units (Wiesel, Jaguar2) have thermal optics, whereas the Milan equipped Kraka units don't.