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Does that mean they at least let you choose CnC:Generals style subfactions for SM chapters?

They should just do doctrines, and with any luck, they will. There are enough different ways to play each army to allow for that. For Space Marines, choose various Chapter types, or whatnot, for Chaos, choose an affiliation, Eldar a Craftworld, and so on.

Making an RTS with a full HALF of the races being some variation of Chaos by the first expansion is, in a word, retarded.

I mean really, having 9 races at the end of DoW1 was insane enough, and they did such an awesome job balancing it...