While I myself am uncertain that this Penal PTRS upgrade needs to happen too, I am pretty sure AT grenades on Penals will ensure no one will want to build Conscripts ever again. Molotovs and Merge alone are definitely insufficient reason to built Conscripts.
I think this is a bold and unjustifiable statement. The fact that Penals cost more than Conscripts and require T1 should be reason enough to build cons instead. The manpower cost for T1 and 1 Penal squad is more manpower than 2 conscripts. Basically when you have 2 conscripts you have 1 penal. So I don't think your statement is correct. I think more realistically the choice is between: more squads on the field (conscripts) that are less combat effective, can merge, and have molotovs, can build sandbags, can oorah, or penals who have better combat efficiency, no merge ability, no oorah (at least until vet1), no access to molotovs or sandbags, and come later. I think if both have AT nades it would be fine, considering that there are quite a few differences between penals and conscripts: cost, timing, performance, unit abilities, interactions with doctrines (ie, PTRS doctrine for Conscripts, Conscript Repair (M4C doc)), etc.