But one thing remains unclear: do both units meet halfway? If so, from where to where do you measure? Because it looks like the left base of Unit Blue is moving a lot more than the Red Unit.
You measure simple, shortest distance between the units, so yes, it's possible that one unit moves a lot further than the other one. Keep in mind, however, that you do this at both stages of the charge: basic move and additional move. If the units don't make contact during the basic move because one unit was too far from the midway point. (ex. it had a long wheel), during the additional move, that midway point gets adjusted and the movement continues.
While being fairly simple, the countercharge rule works really well in most cases with seemingly strange interactions only happening occasionally.
As far as the concern that in your situation the flanking unit is loosing its advantage, a better way to think about it is that it never had that flank charge advantage. It's fairly difficult to flank charge an enemy who can see you and is ready with a counter charge. That actually plays very well.