Japanese peasants were surprisingly loyal, they just weren't military. Most of the Japanese ashigaru were volunteer military recruits, not really conscripts. It was Europe and European colonies, particularly 1600 and later, that tended to conscript a military. (The Mongol Empire conscripted Koreans for a while...) Everybody else pretty much knew that a conscripted army was a bad idea. Even in modern wars, nobody wants to resort to a draft ... that doesn't give you an army, it just gives you a lot of warm bodies that are only useful as cannon fodder ... and the more you use those bodies for cannon fodder, the more the situation decays.
Armor helps against dogs, sure ... but unlike arrows and shrapnel, dogs have brains. If they bite down and get nothing that tastes like blood, they will move over and bite somewhere else. Modern police dogs in most places are deliberately trained to grab and hold clothing, without really trying to hurt the target. They don't naturally do that - wild dogs will run by and slash at a target's legs, and keep making passes until the victim trips and falls or bleeds out and collapses... then they tear him to ribbons. For the record, China's "People's Armed Police" train their kill-dogs to fight like wild dogs ... they release that leash, and something is going to die (either the target or the dog). (They also deliberately breed these chow-shepherd mix animals that are big, tough, and as mean as a snake, just to make sure they're getting their point across... I've never been afraid of dogs, but these animals can be pretty formidable.) I'm pretty sure ancient Japan did the same sort of thing - it is well documented that they trained their dogs by running wild pigs, so those dogs were pretty dangerous opponents by any standard.
The TLD "Warg" code in M&B v.808 was just horse reskinned. If they have anything new and working, I haven't seen it myself. At last check, there were still some problems with custom skeletons, and even if they are possible, that's WAY above my level ... you'll have to find somebody who can work with this stuff, if you really think that critters are a thing that needs to be added. Fujiwara and I discussed adding wild pig hunts, some time back, but concluded that we would have to wait until somebody else perfected a small-animal skeleton. That was on the "way sometime in the future" wish list.
On adrenalin and speed .... yeah, personal combat happens faster than you can really move in normal life. That's part of why criminal knife attacks are so hard to defend against - the attacker is already worked up, physically and mentally prepared to do violence, while the target usually is not. I disabled a pushy-beggar-disguise robber a few years ago in Anyang (China), because he figured he could just grab me and club me from behind, and didn't expect me to go instantly from strolling down the street to using-deadly-force mode. (I broke his arm in several places ... I stopped myself before I killed him, although I set him up to do just that, and it would have surely been easy to finish him off. I kill instinctively ... I have to keep my wits to stop myself. That scares me.) Most people can't shift gears mentally that fast, and so the attacker usually has the advantage. Really dangerous people tend to be able to make that transition much faster than average, and to make that change whenever they first suspect anything at all is amiss, and that's a big part of what makes them formidable opponents.
Actually, arresting family and associates and seizing property are historically common responses when trying to hunt down a fugitive. If nothing else, it denies them hiding places: if you arrest their cousins and grandparents and hold them until the fugitive surrenders, it means he can't hide out with family. Actually directly harming the family members, unless they are actually charged as accomplices, is a pretty extreme measure ... but even the threat that they could be held and questioned is usually enough that all but total sociopaths would rather take their chances in court. In the modern world, there are a lot of legal loopholes that still allow the practice: resisting arrest, obstructing justice, conspiracy after the fact, aiding a fugitive, contempt of court, or being "held for questioning" for an indeterminate period of time (and the definition of "questioning" can get interesting). (All of these things can be real offenses as well as excuses, which is why such laws exist - I am not implying that they are purely to cover up the taking of hostages.) Ancient Japan was just a little more honest and overt about it... "Surrender or we will beat your location out of the kids and then hunt you down."
Military incompetence is a hard thing to prove. Like most things in a complex society, there are countless factors that determine a military outcome. Unless someone can point to a particular decision or set of actions that any sane person would recognize as a mistake, it's tough to figure out exactly who or what was at fault. Even then, proving negligence at the time, as opposed to viewing the situation in retrospect, is much harder.
For example, history has pretty uniformly condemned British Field Marshal Montgomery as being an idiot ... but at the time, consensus among the British command tended to favor him and his plans. (It's possible that the entire British command were idiots. Churchill had already proved himself a military nitwit back in WW1 when he was Lord of the Admiralty.) When things went badly, there was real question as to who was at fault, and the degree of that fault, as opposed to how much was unforeseeable accident. Half a century later, historians and computer models pretty much confirmed that Montgomery's entire plans were screwed up from the outset, and nothing short of a miracle could have made them work as advertized. That was the minority view at the time.
In the case of the American Civil War example, the Union side started the war woefully short of officers. The elite officer corps were all trained at and associated with the Virginia Military Academy (now West Point), and they all joined the Confederacy. (Lee was offered supreme command of the Union Army just before the war started, declined and returned to his home state of Virginia, where he was given overall command of the CSA armed forces. He was not the only one with a similar story.) While Lincoln constantly whined about many of his generals, it would have been useless to court-marshal them, because there was nobody any better to replace them.
Ancient Japan certainly saw the same thing. Officers were not removed from command (court martial or otherwise) unless somebody was sure that a different commander could change the outcome. Actually sentencing them to some kind of punishment (death, flogging, reduction of rank, discharge from military, whatever) was a pretty extreme measure, generally only reserved for specific crimes (murder, treason, black-market weapons dealing, that sort of thing). You would really have to screw up a military campaign royally, to see a command-level officer tried for incompetence. Those guys are generally too rare and valuable to waste on show trials.
The loyalty is not as much idealism as practicality. As I said, it is very much viewed as treason to surrender. If they think that their government has any chance at all of surviving the war, and they ever want to go home, then surrender is just not really an option. (Legally speaking, China as a nation is not as strict as the cultural standards of its people. Social and personal standards, however, have more influence on behavior than laws on the books.) There is also an identification of the culture (nation, clan, whatever) with the government they fight for. This is a left-over of the ancient world, where a subjugated people would lose their land, homes, language, economy, everything - and be marched off as slaves of the victors and worked to death in salt mines or some such. In that thought pattern, if you don't want your kids to die of starvation in a mine while digging coal for your enemies, you fight to the death, to the last man standing, and then do anything you can to spite your enemy before you die. Much of the history of Europe was dominated by the Roman Catholic Church, which had standards for conducting a war similar to the modern Geneva Conventions ... but international war in Asia and fighting between the clans in Japan had no such mitigating factors. Personal honor - the willingness of individual soldiers and warriors to do whatever was necessary - was the only thing between their families and annihilation.
The modern "Japanese Defense Force" was formed by treaty with the United States, as part of Japan's surrender at the end of WW2. The treaty clearly specifies exactly how many armed personnel, ships, aircraft, and vehicles Japan may own and field. The JDF is just about large enough to keep drug smugglers off of the Japanese home islands, provided they don't arm the city cops... arming any city cops would put them over the treaty limitations. By the numbers, it would be about like saying that the United States was allowed a total military force equal to one-half the current strength of the Coast Guard, including any armed paramilitary government employees (city police, FBI, Secret Service, whoever). The terms of the treaty were utterly crippling, and further specify that the treaty remains in effect and the United States will maintain a military occupation of Japan "for as long as the sun rises in the east". Any violation of the treaty will be seen as an act of absolute and irrevocable war between the United States and every trace of the Japanese people, land, and culture ... it literally calls for absolute genocide of everything Japanese if the terms are violated. It is one of the harshest treaties of surrender in modern history - intended to preserve the Japanese people and culture, but to utterly crush any potential military ambitions in the most humiliating way imaginable. The JDF is a token force, not big enough to even make a summary showing in any major conflict. Their only military significance is to patrol coastlines and occasionally hold joint exercises with the U.S. Their equipment is generally up-to-date and their training is fine, but there are simply not enough of them to talk about them in terms of being a modern army... they're coast guard, and that's about it. Japan's current military status is "occupied by U.S. forces".
On that note, the U.S. military has suffered so much attrition from long-running conflicts and budget crunches that they wouldn't make much of a showing in a major conflict either, right at the moment. That sort of thing probably happens to everybody, at some time or another ... but it's still a very bad sign.
And such has been the comparisons of ancient and modern military cultures, and their impacts on society and military theory and practice. I doubt this will have any real impact on the mod, but at least maybe it will keep people thinking.