Ok. Thanks for the explanation. If understood correctly, then I must declare at least one bug.
The issue: The game doesn't distinguish if the path is the first one in a turn or not. That creates unintended situation where I can be attacked later in a turn, yet it won't happen on an automatic path. The same for enemies. Normally, they won't trigger AOO later in a turn, but will when stopped by Overwatch in the middle of the movement. Possibly relates to "Enemy Running Animation Won't stop" bug.
Suggestion: Make it so only the beginning of the first path in a turn counts for triggering AOO.
Yeah, I did that to avoid having the player change to HTH at the end of every turn in order to allow AOO to trigger - that would be an annoying click tax and would slow things down.
Indeed, switching back from HtH in case of the AOO trigger is less busywork overall.
Though it poses a question: What will happen if I set an ally with a gun on overwatch, but the AOO from this ally will happen earlier before the overwatch? As the AOO will switch him into HtH, the question is then whether the overwatch remembers the previous gun setup for evaluating the CTH trigger conditions, and also switches for the shot...