Sorry for the length of the post- but please at least skim the post, and share your thoughts.
Converted Merchantman "cruisers" of which Japan had a total of 14 during the entire course of the war are not the topic of this discussion, nor is any form of Q-Ship; auxiliary gun ship, etc. - having said that...
The US was much more proactive in arming it's merchant fleet than were the Japanese-
"Fortunately, Japanese convoy protection was 'shiftless beyond description'[6] and convoys were poorly organized and defended compared to Allied ones, a product of flawed IJN doctrine and training, errors concealed by American faults as much as Japanese overconfidence."
The Japanese were "remiss" to say the least in arming it's merchant ships. That does not mean they ignored them altogether, but the primary weapon, so far as I can determine was a modified version of the Lewis Gun. Oddly enough, an American Weapon.
American forces used the Lewis gun (in .30-06 caliber) throughout World War II. The US Navy used the weapon on armed merchant cruisers, small auxiliary ships, landing craft and submarines. The US Coast Guard also used the Lewis on their vessels.[34] Despite being originally a US design, it was never officially adopted by the US army for anything other than aircraft use.[12]
The Germans used captured British Lewis Guns during World War II under the designation MG 137(e)[35], whilst the Japanese copied the Lewis design and employed it extensively during World War II;[34] it was designated the Type 92 and chambered for a 7.7mm rimmed cartridge that was interchangeable with the .303 British round.[36][37]
The "upgraded" version of the Japanese Type 92 was the
Type 1 Heavy Machine Gun, (also 7.7mm, but slightly lighter and more manageable) pictured below - This appears to be the weapon seen most in SH4 on Japanese ships in TMO- I could be wrong, but from the info that I can find, and visually as well...
Note that I am not talking about heavy guns here, like the 20mm or even larger "cannons" that were mounted on high value ships- but simply the generic machine guns that are so prevalent in TMO and
present on all Japanese Merchants.
These weapons are simply not a "military" threat to a warship, even one as lightly armored as a submarine at ranges above 600 meters. The pressure hull of an American sub was about 7/8" thick steel and it COULD be pierced by a non-opaque (dead on - 0% angle) round of 7.7mm armor piercing ammo at a range of up to 300 yards. Definitely, these babies WOULD pierce the hull (dead on) at ranges of 100 meters or less.
BUT, standing off, at a range of 600-1100 meters, as recommended in the U-Boat Commander's Handbook- these weapons should NOT pose a serious threat (a 'military threat') to the sub itself. To human flesh, they would certainly continue to be a real threat, so my gun crew and watch team would be at some risk, but to the integrity of the sub. Not so much.
A merchantman armed only with these machine guns falls under the classification of "poorly armed."
I wouldn't expect to sink a merchantman at 800+ meters with a machine gun- I just don't expect to be sank under those circumstances by the merchantman either.

What are your thoughts, and how could the "sting" from these light weapons be modified within the game without removing them from the ships altogether?
Please, tell me your thoughts. It is a matter of taste I suppose, I have told you mine and explained the reasons- care to share your thoughts? Would it in your opinion be "cheating" to modify the strength of these weapons? What other alternatives are there to change something to just tone these puppies down?