If it's done this way then it can mean that you cannot attack enemy infantry units until they're about 1km away from one of your units, maybe even closer. That's quite a change...
That's why a good defence layout have some eyes up forward.
Also, if, say, a tank is identified as enemy one, it's likely that those guys moving in lines around him are likely to be enemies too, not civs or friendlies. So the same logic as with return fire can applied in this case, marking all units in a set distance as enemy.
BTW, if a unit is identified as enemy it may be useful to retain his identification for some time (5-15 minutes?) even if the LOS if broken so we won't have to reID a tank that just disappeared for 30 seconds in a low ground.
Another issue is the AI artillery. If I leave it as it is then the AI won't call artillery to the unknown targets that are detected via ground spotting, so it will be even more passive.
I don't think that AI firing arillery on any contact is good, anyway. My experience so far show that artillery is nearly useless against a mechanized force closing in. Too fast, too unpredictable - chances that an artillery mission catches them are very low.
A few ideas, though, if you want to improve AI artillery handling in defence:
- if AI have DPICM, he'll try to reserve 6, else 3, guns for targets that are stationary for more than 2 minutes and pester them with 2-3 salvoes. Good to remind a player that he needs moving and may actually kill something valueable, especially if recon is able to penetrate into the rear of advancing player forces.
- out of remaining tubes, AI'll try to reserve every second to strikes against dismounts. Infantry is much slower so with a little computation AI can hit them right on head with an arty mission. Also, no more dismounting in the open without any smoke or cover.
- remaining ones can be used to make pre-set FMs over fortifications on the most obvious approach routes. Player forces are likely to move through these, get bogged down a bit, so why not make life even more fun for them with fire missions?
Those points are not so far from what different Field Manuals state regarding the use of artillery in defence.