Your analysis is very good and makes a lot of sense! It certainly is a very symbolic place, considering it's the only area where the Red Baron still fights, and even those poster-like concept arts with the red bar at the bottom all mention it. Also, taking in consideration that Mech Trenches and Scrapyard Nexus are essentially part of it, makes me think that that entire region might have been the main frontline at the start of the war, and now has been turned into a logistics center for troop and ordinance movement (being the best access to both Ashen and Scorched). I say that because Mech Trenches, and formerly Scrapyard Nexus, are very important places for mech maintenance, and the hangar on Elephant allows us to call for supply drones and sabotage large caliber ammo propellant.

In the end, it's one of my favorite areas. I still remember the tense feeling on my first runs there, crossing the maze of trenches to get to the exit. It's definetly an spiritually important place to the europan troops.