My main problem with how SH3 handles neutrals is that when using TC the watchcrew never verbally shouts "ship spotted". TC drops to x1 but I know straight away I'm dealing with a neutral because there was no verbal annoucement to go with the drop in TC. You can also increase TC to whatever you want in the presence of a neutral which you can't do if an enemy ship is in range. Same applies to aircraft. 
Nemo
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"I'm afraid there is no disguising the fact that King's obsession with the Pacific and the Battle of Washington cost us dear in the Battle of the Atlantic".
Sir John Slessor GCB, DSO, MC, DL
AOC-in-C Coastal Command RAF
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