Could be interesting if you could train some special kind of engineer which would be specifically used for frontline-fortifications, like bunkers, tanktraps and defense systems. Basic Pioneers could do the same, but they'd be less effective at doing it. But they could repair vehicles instead.
Regarding retreat:
Just imagine a blob of Rifles combined with some snipers picking off all your units in a big fight. Such an attack is nasty even WITH retreat.
Do you have an idea how this would rape WITHOUT retreat?
Not being able to retreat would result in EXTREME lame and boring gameplay, since the Ostheer would need to destroy the US within like 15 minutes, or they would loose. Same with brits, I'm pretty sure commandos would be amused about how easily Ostheer units would be demolished.
When the units gain veterancy through killing stuff and the faction got a not-so-strong lategame an ability to preserve units is a MUST, else you'll just make the faction unplayable in matches larger than 1on1.
However, cutting down mp income by using higher unit upkeeps is a good idea to make them have a weaker lategame than Wehr simply because they won't be able to replace men as easily as the other factions can. Which also promotes vetted units as they have higher damage / surviveability than unvetted ones.
