Since there's a bit of a Curtis-fest here, I'll echo both Tom and Houlie's sentiments and share my own story about him. Back in 2013, when I first started playing, Curtis was one of the very first people I came in contact with. We met for lunch one day, as he was in my general vicinity for a...
I agree in principal that it's balanced, as when I played it years ago it came down to the final CC, but I would choose to defend if given the option due to the fact that it's basically a dense jungle body block scenario.
I would say "no" if not in bypass, as per A2.9 "A unit/weapon may not set up overstacked or in a hex it could not enter during the normal course of play..."
Since a vehicle can only enter a Rail Car hex using VBM, this would preclude it from being able to set up within the Rail Car itself.
A11.41 allows all, some, or none of the units to ambush withdrawal. They could choose to go anywhere except K3. Any units that withdraw are not required to all go to the same hex either, though they certainly may.
I would in fact say that a leadership modifier must be applied, as per A10.72.
I also agree with your reading of SSR2 that any units which break are not subject to any further LLMC/LLTC.
You'll have fun with this golden oldie!