In another take on the idea, I used to read a British comic called "Warlord", one of the stories was "Kampfengruppe Falken", a penal unit led by the eponymous Major Falken who had refused to commit an atrocity for the SS. His troops were rough and ready and constantly under the cosh but they had more honour and humanity than the baddies, the SS.
It might be an interesting twist to have a small group like this, honourable men who refuse to follow the excesses of the Communist line yet still fighting for the Motherland. In fact, a group of loose cannons like this could be a good start of a PC group.
I've toyed with the idea myself, a senior Soviet Officer busted down to Major for refusing to commit atrocities in somewhere like Chechnya and then made to lead a "suicide unit" on the Sino-Soviet Front. For some reason the unit gets transfered to the Western Front.
Another source of inspiration you might want to look up on penal battalions are the writings of Sven Hassel.
As an aside, the unit of commandos tasked with killing Churchill in "The Eagle has Landed" was technically a penal unit.
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