Do you realise that you stated nothing new and that I didn't need you to point me the so-called problem.
I get easily over a tension about a line in the rules about white counters.
And, as you seem to vainly try telepathic skills on me, I ordered MMP's redux of Swedish Volunteers and I will go...
The wound severity test comes first.
If 5 or 6, the leader dies.
Its morale is not changed.
A17.11 says that the wound "is treated as a KIA".
Only a 1-4 (or 1-3 for a previously wounded leader - but this is not the situation adressed here) generates the effects on the leader's morale , movement...