I personally think MiBs SHOULD retaliate.
The problem is that if they do, they're given the alien weaponset instead of their own weaponset, since there is only one alienDeployments for retaliation.
Occasionally when doing a MIB Terror Mission through the battle generator(PC version this time, not Android) it crashes because the map/ufo/something is too tall.
Idk, it's a strange error, as mib terror mission now uses default urban terrain, in theory; maybe latest nightly missions changes made it outdated again. But you're never saying which OXC version you're using, nor if you're using other mods: at least if you report some issue this kind of info should be given.
Anyway, I already pulled the mod form mod site; right now it exists only in this topic as an unsupported WIP project, on which I won't work until I have a fixed target (aka, 2.0 milestone). So if you're playing a campaign I discourage you using the mod.