I am not saying it should be just as vulnerable to axis indirects as other mortars, what I'm saying that you practically cant counter it with your indirects even if you play right\enemy plays wrong. Even ostheer counter-barrage dont work.
There is a difference in being "hard to counter" and "almost impossible to counter". This problem only leads to the fact that soviet players can get 120mm mortar closer to the frontline, effectively neutralising the fact that its auto-fire range was nerfed. Or if there are mass enemy indirects\inf to stay at safe range and use barrage.
And speaking of situations you've discribed, yes its true that its less effective against blobs, but the problem is that in teamgames soviets already abusing maxims themselfs on a line maps or use penal blobs themselfs into 120mm mortars.
With maxims its self-explanatory, with Penals even if Ostheer\OKW goes full gren\volks build, you just need to stay in cover with your penals and zone volks\grens away from your 120mm, because they cant push penals into close\mid range and 120mm mortar in long fire-fights will eventually hit them.
In vacuum yes, 120mm is vulnerable to flanks and mass inf, but on practice its really hard to get to it. By the time soviets can call-in 120mm mortars both Ost\OKW dont have properly established army to orginize such pushes, which can "just" overhelm. They might be able to out-play soviet player, but its a question of a player skill which is irrelevant on the topic.
And even if you somehow managed to flank and push, soviet player still have 4 models to spare + retreat button on top of it.
Situation is becoming even more ludacris when you add supporting teammates.
I mean sure Panzerwerfers can counter it, Stuka can counter it somewhat, but what difference it makes if you are unchallanged for at least 1\3 of the game (without stuka around for even more). Which on its own just allows you to snowball like crazy.