Looking at the Player's Reference under Casualties "Replace a Squad with a Shaken Half Squad. Flip Somali Squads to their Half Squad side. Eliminate a Half Squad or Weapon Team"
Does this mean that for the Americans or non - Somali squads when they take casualties they are replaced with a Shaken HS but it's different for the Somali squad which is simply flipped to their HS side?
Exactly. Somali special reduction rules are part of the module rules and override the usual "replace with shaken half squad" rule.