If only it worked that way Surimi. I've had the same frustrations as the OP. It does not make any sort of sense the way troops and generals are picked. What you posted would make sense if that's how it actually worked. However, it doesn't.
From what I can tell after a few attempts (as PRC), it picks 6 *RANDOM* divisions and a *RANDOM* general from all available troops/generals, regardless of their current position or leadership. In just my last attempt it made *MAO* the general! (suffice to say I lost that one big time). It also dropped 2 troops that were on the border and pulled in 2 troops NOT on the border (bordering China). It also forced all 6 divisions to one specific location rather than multiples across the border.
So, in sum:
1) Picks any 6 divisions, regardless of location
2) Picks any general/field marshal, regardless of if they're leading other troops
3) Picks one or more spots on the border and drags the 6 divisions to it
4) You're the attacker, suffering hefty penalties (as the defender gets far more defense than you get attack)
5) The defender can reinforce after you force a defender back; you cannot re-engage after one of your attackers is pushed back
In all, this seems like a wasted mechanic as it is currently implemented, which is unfortunate. It is not at all intuitive for the player and causes a lot of frustration. I'm not suggesting the player/attacker should win in all cases, but at least make the mechanic make more sense. Allow the player to decide if the troops they have are in good enough shape to engage a conflict. Right now the player cannot make a meaningful decision because it's a COMPLETELY random outcome, and moreover, can cause problems on other fronts when random divisions get pulled away from those fronts to the border conflict, while other troops ON THE BORDER just stand around because they weren't selected.