I decided to play a game with all the factions.
I decided also to attack the Capitar faction. I went into tactical combat and learned that the intimidating trait is beyond ridiculous.
As you can see if you load the save game, and declare war/attack carrodus to the south of my sov...
In tactical combat you will be able to use the actions you start the combat with. After that however you will simply end up waiting till they kill you off.
In Autocombat, sometimes I win, sometimes I lose. The morale reduction does not appear to function.
Either way, the ability as it stands is ludicrously overpowered in tactical and broken in autocombat.
Note: When I play as Capitar with Carrodus as my sov, the reverse is NOT how combat happens...