Taking a lot of prisioners can pose a true tactical problem. In WWI sgt. York captured about 10X the number of men in his patrol and had to escort them to the rear. A variety of things(all bad)can arise from this situation. Similar (but more on a stategic level) problems occured in Iraq with the surrender of thousands of Iraqis to patrols, cameramen, reconnaisance helecopters, etc.
Conversely, I don't believe that prisioners in WWII were used as human shields very often. It would make them very disinclined to surrender in the first place.
Clearly what is going on in this game is an aberation. The question is what to do with it. Perhaps some historical guidance is in order.