Fact is in vCoH it worked, KT was a godlike tank in vCoH and only few units had cappabilities of actually penetrating it frontally, but since deflection damage existed it allowed your AT units to keep at least some value against it by dealing cheap damage to it. If it was CoH2, then pretty much all your AT units would have become obsolete the second vCoH like KT hits the field.
Honestly I think the CoH2 system works with the units its balanced around. Of course the vCoh KT would obsolete all CoH2 AT weapons, it's because it was made for a different game.
It all depends on the balance philosophy. You could easily argue for it both ways. I mean, in reality, how much better would it be if massed AT can still do damage regardless of penetration? I don't see how it mitigates the problem of AT saturation. If anything I feel like it would exacerbate it. Though it would certainly make heavy tanks less effective, it also means that heavy tanks have to have extra health added to them if every AT weapon in the game has the ability to deal damage to it. Otherwise why would you buy a big moving target that gets damaged by everything, period?
I think that with the addition of side armor in CoH3, such deflection damage is going to be unnecessary. Flanks don't have to be as deep to make heavy tanks less effective.