Smoke comes too early,it invalidates the main lynchpin of ostheer infantry tactics too quickly,combined with grens totally bullied by rifle DPS it overpowers ostheer rather easily.I wouldn't have problems if smoke was avaialable aftre lieutenant.
Its a iwin button.Setup and reposition takes so much time,before u again setup he's on top of you or close enough to gun down mg gunner/grenade wipe.Usually once mg is made useless,rifles walk over the poor grenadiers who can't do anything,totally outclassed -and then mass retreat.
This only if you don't have spotter, MG42s have better range than smoknades, so by the time they fire the smoke and go in to eventually use a grenade, you have by far enough time to reposition your MG.
I really have a problem with your idea, what do you expect, anything that goes into your cone of fire should be insta pin and can only hit retreat button? Is that your conception of a balanced system? You put an MG and its already a major threat for USF in early game (I'll not talk about Sov), USF cannot just retreat every time it face an MG otherwise its a GG because you can simply push them and lock them into their base with 2 MGs. Your MG is there not to kill but to slow down and debuff, and you do the killing job with your grenadiers. Now maybe grenadiers are underperforming at vet0, but the MG no.
Someone has a really good comment on MGs, there is no more skill and micro in putting an MG to lockdown a sector than using a smoke and going straight away to overtake it.
And I'll add to this: Player's skill evaluation comes when the smoke has been launch and the best microing decides the faith of the skirmish.