Many of the In Action books are inaccurate in many details. The 37mm wasn't used.
I posted a photo of a 37mm armed Hs129 which clearly taken in the field conditions and you say it wasn't used? Did they photoshop that pic or what then? You keep saying it wasn't used and yet you are unable to provide any source to prove your stance and at the same time I just posted a photo which shows a 37mm equipped Hs129.
I couldn't care less if you in your personal universe think that it wasn't used. If you are certain it wasn't used I'm sure you can provide proof which says so and I'm sure this source of yours is also able to explain how the photo I posted is a fake.

What are you waiting for, just post the source!
Not that it matters in the context of AH either way. I'd always take the MK103 in favor of the BK 3.7 anyway as the MK103 is already more than capable to penetrate the top armour of most tanks, carries 100 rounds of ammo instead of 12 and is lighter.
Henschel wasn't making money unless they were producing a plane. They didn't want to STOP production. They were told to from an outside authority. That is what we call being cancelled. IF, on the other hand, they decided of their own free will to stop producing it, that would be "discontinued." There is a difference in meaning.
Is this your own opinion or can you provide me with an actual source?
Martin Pegg's book has nice info on the halting of the production but I just don't have the energy to quote it because it really is useless knowing you anyway. Over thousand Hs129s were produced and they served with distinction...something which the winner's side of the history hasn't exactly potrayed in the light it deserves. Thanks for Martin Pegg's exhaustive research alot of those details have now been published.
P.S. I never said it was cancelled because it wasn't successful, just that when it was cancelled it was still unable to compete. The airframe remained unchanged for many years while ground targets leapt ahead light years in armor development. When the Hs-129 was developed, the Panzer IV F1/F2 was the biggest baddest thing on the battlefield. There's a big difference between this and the T-34/85, for example. It's like the Cr.42 being used in limited capacity up to 1943/44... Doesn't mean it could compete, just that they were desperate.
At first, the main armament was 20mm cannons and 50kg bombs. Later larger calibre weapons were developed and installed into it. I'd call that development. In real life the attack angles were a lot less shallow than in AH for example. In real life the attacks were performed from the sides and from the rear. The steep angles that many use in AH would have been quite hazardous. As I've already said, MK103 penetrates the roofs of most tanks (only Tiger I and II are excluded from this) in AH with ease.
And as far as competing in general, both the Martin Pegg's book and Kagero's operational history of the Hs129 are both filled with accounts how Hs129 alone halted Soviet armour offensives and left scenes where tens of tanks burning, T-34s, Klim Vorosilovs etc. Those accounts are too numerous to quote.
If people aren't willing to dig any deeper than to the popular "commonly accepted" history for this aircraft, there's not much I can say to convince anyone. And I don't really care one way or the other, the information has been published and it is the physical parameters which deside what kind of aircraft it would be in AH. And in many way it would compare favourably to the Il-2 with 37mm cannons in AH. Weather people are willing to learn or not is another matter.
Books:
Hs129 in Combat by Kagero publications
Hs129 PANZERJÄGER! by Martin Pegg
Hs129 in action