Don't make me throw this thing!
1. When a squad suffers casualty reduction it must still take the morale check, right? It says 'other squads' in the rules, but then it also says 'any just-reduced HS'.
2. If the squad which suffers casualty reduction was already broken, then fails the morale check, is it then casualty reduced again, i.e. eliminated?
Situation 1 - unbroken squad suffers a k/2. It is immediately reduced to an unbroken half-squad, and that half-squad takes a 2MC. If that half-squad breaks, it remains on-board under a DM counter.
Situation 2 - broken squad suffers a k/2. It is immediately reduced to a broken half-squad, and that half-squad takes a 2MC. If that half-squad breaks, it is removed from the map (breaking twice = eliminated).
Hope that helps!