I love this submod - I too feel that the current medical situation is a bit insanely hardcore.
I did however use Medical Bags all the time, more than I ever did use Med packs. A weight of 8 for 2 fatal wounds is decent (4w\fatalwound)
First aid kits were a bit worse, a weight of 5 for 1 fatal wound.
Medpacks were kind of crap in my opinion, I'd always just bring more medical bags.
Unecessarily long
A very important thing is how many TU's one expend on healing per turn. Medical Bags were light and affordable "heal and drop" items that no other item in the early game could beat. I found myself constantly barely scrapping together enough heals to keep my guys alive between taking cover, running and gunning down enemy combatants who came too close - this would not have been possile to do with the MedPack as easily. Medical Bags have 15% time cost and MedPacks have 20%. That is an extra 10% for two heals. It might not seem much, but it has been the difference between barely surviving and becoming a KIA for me dozens of times. With the more affordable cost of Medical Bags, one could drop them for 2 time units and not worry as much. That is a significant operational advantage as I can equip more guys with enough heals that can easily be ditched in emergencies without affecting my running costs too much. With the reduced weight I can take more grenades\ammo or bigger weapons. Medical Bags were always better than MedPacks. Fight me.
First aid kits were used very rarely by me as well, although I have used them in scenarios where I simply could not take medical bags with me for some reason.
All in all, the number of heals provided by weight was too low for me to ever consider venturing too far away from my deployment vehicle. MedPacks were placed on the heli\car\craft and Medical Bags were what I used on "trips".
I think you are onto something. The new gauze item should be very welcome to allow agents to venture further and toy with other equipments. First aid kits having two uses is good (makes them not useless), medical bags having three is okay. MedPacks being removed is okay, but honestly I think you could just make MedPack into the TraumaKit and make the TraumaKit better.