Instead of scoring hits Renly Baratheon can elect to improve morale on attack rather than score hits. If the dice roll scores more retreat results than the defending character is able to retreat do the flags that carry over into hits count as morale along with any other hits?

Also more importantly, I'm assuming the number of hits is capped at the number of figures in a squad, for example 3 or 4 in a non commander squad. Otherwise you could coordinate an attack with Renly as the lead attacker roll like 7 or 8 dice and if you are attacking a green unit you are likely to move your morale by 6+ in one attack. Would it be correct to say this is not the intent and the number of hits is capped at the number of figures in a non commander squad and the number of figures + commander capture rating in a commander squad?