I just ran it again with an MG42 (below) and then again with an SMG squad.
In both cases the same thing happened just as in the pics above, namely close-packed units suffer more than dispersed units, so try to stay around 25m apart if possible.
However the MG42 and the SMG squad did cause more casualties than the squad, not surprising seeing as they have a higher firepower rating than the ordinary squad.
Pic below shows the Russians running like jackrabbits after being entertained by the MG42.
Same thing happened when I switched the MG for an SMG squad, there were heavy Russian casualties again.
CONCLUSION - Rifle squads, SMG squads and HMG's
all spray fire at not only the target but at his nearby pals as well, but the HMG and SMG cause more casualties because of their higher firepower rating