It's how the moral system works, the MG causes moral damage and eventually the crew routs.
Yes but wouldn't the tank have to be disabled / immobilized? Otherwise they could just back off and drive away,
The shelll power option is the one from the ingame menu? If so, it was disabled. As for tanks, I think it can be done to any one of them if you spend enough ammo. You could try putting some tanks with no ammo on the test range map and spraying them with the MG, I think the crew are bound to bail at some point, and you should be able to see that their main gun was put out of action by MG ammo in the post-mission statistics.
Hmm probably we need to dial down their 'armour penetration factor' in the common_res,