Tried out the extra torpedo malfunction mod last night... My first target of the night was a single large freighter. Fired four torps - 3 deep runners, followed by a circle runner that sunk me!
Time to start crash diving after firing torps, I guess.
As far as the merchants splitting in half business, I have seen this as well. I will try this without RSRD to see if it still occurs, but with my current setup merchant always break in half. It doesn't appear to happen to warships - I got three hits on a Takao and it took some time to capsize and sink.