Use my repro mission, or place an AI unit in the editor, give it 4 waypoints spread around 400m in a circle and watch how the unit comes to a crawl after roughly 40 seconds in.

Additionally you could add this into the units init:
nul = [this] spawn {

_fatigueunit = _this select 0;

while {alive _fatigueunit} do {
hintsilent format ["Fatigue: %1\nSpeed: %2 km/h\nTime running: %3",getfatigue _fatigueunit,round speed _fatigueunit,time];
sleep 0.02}
};

This is breaking many missions which depended on AI movement. Not to mention that it's extremely easy to take out fatigued AI units because they simply won't take a rest until they're not fatigued because they don't know it.

At least integrate the fatigue into the AI FSMs so they'll rest when fatigued.

It would probably be more authentic to make the slowdown happen once fatigue reaches 0.8, slowly increasing the speed reduction until fatigue hits 1.
When fatigue is at 1 for at least 15 seconds then it could be reasonable to further reduce the units speed, same goes for the player.