The Marine rule should be in effect (and it was when I played it last, but bugs are weird, so).
Historically there were no cover on the hills of Sugar Loaf and Half Moon on Okinawa - so the scenario shouldn't have it either.
The trick to the map - as with many scenarios between the Marines and the Japanese is the time factor. As the Japanese you almost always have to gamble everything at as early point as possible, whereas the Marines win with "slow and steady" approach.
I remember hating SL&HM when I first played it - but it's become one of my favorite Pacific maps - because both sides have SOME time to maneuver - but both sides are also very exposed (the Japanese to the US artillery and the US to the Japanese Infantry 2hex assault ability.
It's also in this scenario where the caves REALLY come into their own and need to be used.
Any way - it's one of those scenarios that grows on you.