I'd like to comment on House Rule #2:
This idea makes some sense. However, it might make flotilla craft too resilient. I too find the way flotilla craft die like flies in GWAS/SWWAS to be more than irksome. I've been working on my own solution over the past several months. It's difficult to find the right balance between vulnerabililty and resiliency. It's also difficult to balance the dire threat torpedo attacks represented in the minds of flag officers with the rather limited results that took place historically.
One aspect of the equation that GWAS/SWWAS has never attempted to take into account is that of the human factor. Men in unarmored ships faced by hot enemy fire will often veer from a direct attack rather than be annihilated. I'm working on a torpedo attack routine that includes this human factor. The routine would also limit the exposure of flotillas to enemy fire during a general action and include range attenuation.
I think they have admitted that because players don't have the same considerations as their real world counterparts (i.e., ships are expensive to replace and sailors take time to train) that they take many more risks with ships than would happen in real life. I'm not sure how you get around that.