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i disagree, the wording on activations is pretty clear. If an overwatch action is not resolved until the shooting triggers, then it can never occur, because the opponent cannot activate a formation until the overwatch action finishes.
and you WOULD have to activate every turn in order to remain in overwatch, except that the rules explicitly state that you do not need to. they added a very clear passage to explain that you can remain in overwatch without having to activate again. one does not create an exception to a rule if the exception is the rule itself.
a formation performing an overwatch action may not move (this could, but does not explicitly, cover countercharges and withdrawal moves, its a seperate kettle of fish if this prevents them from moving, or causes them to lose overwatch if they do)
and if a unit performs another action in a following turn, or shoots at any point, it is then considered out of overwatch.
a broken unit does not automatically move, or perform another action. (and even if it did, taking a further action that turn is specifically not listed in the rules as removing overwatch. there are other rules that say you cannot take a further action, but if a special rule, or more likely, a scenario rule, where to override them, you could stay in overwatch in your following action, so long as you dont move)
being broken, or being engaged, does not automatically remove overwatch. so for instance a unit that breaks, say due to ranged BMs, may choose not to retreat, in order to remain in overwatch, it cannot shoot, because it is broken, but it would retain its cover save.
from a rules perspective, there is nothing written to suggest otherwise
from a fluff perspective, a formation of dug in infantry that break are not going to simply jump out of their fox holes and stand still. they'll either retreat (ie, make a withdrawal move) or hunker down even further (ie: stay put and remain on overwatch and thus, in cover)
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