Well you do realize cowardise has been punishable by death since ,...hmmm the Bronze age?
Basic reason, you're in the military, if you're given orders to do something and because you're too busy clutching your face and crying like a school girl to do it 10 other soldiers die,.....etc etc.
Just imagine if this guy had to provide cover fire on a fortified enemy position while a squad got into position to take them out, and he freaks out and doesn't perform his mission. Now you might think "So they just fight harder/longer"...but if his cover fire was meant to distract the enemy so the squad could sneak past their line of fire,..the squad would get torn to pieces.
It's one of those charges that death would require one hell of a reason. Also it's a "In time of war" penalty. I could possibly see if we had the draft in effect and a soldier that had been drafted was charged with cowardise,....then yea the charge would be questionable to the point of only, "You forced someone that couldn't handle it into the situation". But keep in mind not only was this guy a Volunteer,...but he'd been in for 5 years. Yea he most likely hasn't been to a war zone until Iraq, but the point is still he signed up to do a job.
Also it's not surprising that the Cowardise charge was used right off, nor is it "A sign of trigger happiness". It's a warzone,..commanders can't afford to take chances with crap like this. Cowardise was most likely that best suited charge for the situation that allowed his commanders to remove him from the area, remove his Security Clearance, remove his weapon, and confine him under watch.
Had they just sent him back to his unit until investigating and the guy flipped out and started tossing grenades into ppls tents,...we'd be *****ing that they allowed him to do it. Just like that guy from the begining of the war. They are responible for every person under their command, this was likely the 'best course of action' to protect both him and his fellows. (Keep in mind in a warzone some of your fellow soldiers might not be too happy with you if you're a coward, this could have also been a way to seperate him and keep him from harm)