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Hello from a lousy KP player! (How much years it will take me to achieve a victory in this game?)
AtD is characterized for large extensions of terrain that are devoid of units. This allows a lot of room for maneuver. This is a thing that I love when I play as the Germans.
If playing with FOW enabled, recon has a vital role for the German player. In particular if you use the real life operational concept of encirclement with your Panzer Divisions: you have to now very early where those "to-be-encircled" forces are, how likely and far they will move from where they are at this turn, if they do, which will be their likely strength, etc. So the question is how to get the maximum information out of your recon units and keep them safe (they unlikely will withstand any attack, even from a lousy Russian infantry Regiment).
I wonder if this approach could work:

1) Mentally mark what is the maximum range of the least mobile Regt. Of the Panzer Division, both in normal and extended moves. This marks how far you can move it conserving its fight capability in this turn (normal move, mark 1) or not (extended move, mark 2).

2) Move the recon unit half of its movement allowance in individual, one hex moves.
If enemy units are revealed is very likely that they are within the reach of the Panzer Division (remember, we used only half of the recon’s unit movement allowance). Now
is decision time: attack the enemy units, bypass them or encircle them?
The decision of attacking, bypass or encircle usually depends on several factors. But the most important for me is if the planed action is worth for the operational plan.
About attacking, I try to avoid battles that are not absolutely needed to reach my operational goals. This is sometimes opposed to what the game may ask you (i.e. kill enemy units and get points for it). A single event of bad luck (i.e. a failed overrun) could result in the enemy reinforcing the position in the next turn: you get stuck, likely accumulating losses that HEAVILY reward the Russians with victory points. Not a good situation. If I decide to attack, the recon unit is already in a good position to support the attack. After the attack, the Division will likely be unable to make anything else for the rest of the turn.
Bypassing enemy units sometimes is required because the enemy units are not worth to attack (why expose a precious resource like a Panzer Division to unwanted attrition and more importantly why to stop it?). Bypassing a group of enemy units is many times the first step for encirclements. A new suitable waypoint has to be chosen for this purpose.
Regarding encirclements: they could be an operational objective, planed before you start an operation, or they could just be decided on the spot to support the operation, like mini-encirclements that help big encirclements. Again, a new waypoint for the Division is chosen.

3) If no attack is decided, move recon unit towards the new Division’s waypoint but just until mark 1. Again, do this in individual, one hex moves. If new enemy units are revealed at any time, is decision time again and repeat what I stated above. The main difference is that now the bypassing and encirclement options will probably be completed in the next turn. This is because if you bring the Division to the spot where the recon unit is sitting, they will not have as much movement allowance left if they produce overruns.

4) If no enemy units are revealed, move the recon unit towards a desirable waypoint just until mark 2. Activating the recon’s unit extended move mode may be necessary. The task of the recon unit is now done. Now move the rest of the PzDiv with the recon unit.

The central ideas are:
-Join the PzDiv with the recon units at the end of the turn so the latest don’t finish the turn dangerously exposed to the enemy. Keeping the eyes on marks 1 and 2 help you avoid that problem.
-One hex hoping by the recon units avoids unnecessary bumping into enemy’s ZOC, which in turn reduces mobility.

Would this work?

Your approach is excellent in game terms, and probably accurate historically -- after all, that is the role of recon units. But using this tactic you may win many battles but lose the game. The critical factor in winning is occupying the high value objectives like Orsha, Mogilev, Velizh early in the game to garner victory points. Mogilev is a lost cause -- it is a supply source so cannot be isolated, and is flooded with Russ units early in the game, on both sides of the river. I frankly believe it is impossible to take by turn 5. Orsha is a little easier, since not a supply source, and it can be attacked by moving all of your mobile units across the river north of Mogilev (there is a river), while driving south from Vitebsk and east. In the city there are no overruns, however, and it is a battle of attrition here, too. Velizh is also impossible to capture with the mobile units available. You have to go pell mell toward the city and end up attacking accross the river, with no overruns, agains massed defenders while you find your won units cut off and isolated by the Russion units arriving from the north. I have managed a draw, capturing all but two objectives, and destroying 232 russian units, but I was only able to take Orsha, Mogilev and Velizh late in the game. Your thoughts?

Hi Mkeo!
I will not claim the method is good, mainly because I am not able to manage a marginal victory in AtD!
You are totally right about the importance of capturing objective cities at the right time. Indeed, part of my rambling was about bypassing Russian units, which destruction only rewards you with 5 points a piece (compare this to a 75 points reward for the Russians for every German unit destroyed). Smartly bypassing and or encircling Russian units is sometimes the only way to not get bogged down in your way to the objectives.

This is my current ("my way to failure") approach. BTW, it doesn't work!
-Priority one: capture the objective cities (almost the only way you get worthy victory points)
-Advancing towards the cities in a straight line does not work. It will bog your forces down (remember you are supposed to get Orsha by turn 5, Mogilev by turn 7, Velizh by turn 5, etc) and increase attrition. On attrition: I always wonder if the Germans have less total forces than the Russians. In other words, what would be the result of an imaginary battle where you put all the German forces in an imaginary (mega)hex and all the Russian forces in another imaginary neighbor (mega)hex? Is the sum of all the attack factors of the German units bigger than the sum of all the defense factors of the Russian units?
-Plan to capture the objective cities ussually are an attempt to force the enemy out of them, and encircle these forces as they do it. While doing this, I choose the battles that I feel are needed to fight, not the battles that the combat advisor is suggesting me to fight. Destruction of the enemy is prioritized only when its forces are encircled and out of supply.