Just played 3 Sovjet game, Penals + Guards = old Obers/Airborne LMG blob.
No wonder everyone spam them.
>> The combination of the raw amount of bonuses Penal Battalion squads receive with the power of their flamer upgrade made the squad capable of winning nearly all engagements vs infantry
What? It happens in their first engagement at first two minutes mark.
Try to use cons and maxims, either con spam, maxim spam or mixed.
That should help you find out and understand why penals are being used now.
There is literally no need for any kind of argument, just go and see for yourself.