Doesn't TMO also increase the armament of almost every enemy vessel?

Nearly every enemy merchant is armed right from the start of the war (and the effectiveness and range of their fire has been improved in the latest versions). I also believe some IJN destroyers have had their DC capabilities seriously upgraded beyond historical specs. with K-guns, etc.

I believe the purpose of TMO is to return the fear of death to game-play, and in the authors words, to make you react and think and worry in the same way a real Skipper would in a similar situation - even if historical accuracy has to be sacrificed to achieve this.

yes, almost every merchant is armed so you have to rely exclusively on torpedoes. You can still do night surface attack though. I only use my deck gun on Sampans.

Pretty much every harbour is also covered by coastal batteries to discourage harbour raids.

Can't really comment on the DCs. I did get sunk once in dec.41 off of PI by a very accurate DC attack even though I was at 325-350 feet. Overall underwater, I dont notice a big difference between the effectiveness of RFB vs TMO escorts, unless you run into a "Bungo Pete".

Yeah, a priori knowledge places us in a much better position than the actual skippers because we know what will occur. A lot of the "what ifs" I am looking for in an ideal sim the AI simply cannot do without access to the source code, which will never happen. Either the AI is laughably easy or the AI is uber to some degree and only anti-AI tactics will work because of AI limitations. It is kind of a Catch-22. However, in defense of a harder AI, I can say that RFB did surprise me by ignoring the 150 foot rule on its depth charges before June of 43. I survived, but it was a shock.