I can't remember if the show portrayed any of the troops reactions towards German troops, but Donal L. Miller's The Story of World War II tells of Signal Corps photographer Walter Rosenblum's recollection of an experience at the Dachau Concentration Camp:

Overcome with horror and rage, the troops "banged down the gate of the camp," Rosenblum recalls . . .

"Some of the American troops were so upset by what the Nazis had done that they shot some of the German guards," said Rosenblum. A U.S. squad guarding about 122 SS prisoners, who continued swearing threats at their former prisoners, opened fire with machine guns and killed all of them . . .

At that point, the soldiers turned over the remaining guards to the inmates. One GI gave an inmate a bayonet and watched him behead a guard. Many of the guards were shot in the legs and could not move. A number of these disabled guards were ripped apart limb by limb.

As far as the locals, however, while I can't speak for the specific camp they liberated in the show (for one thing, I don't remember which camp it was), it does appear that using locals for grave digging did happen, at one camp at least. Miller relates that in Brigadier General Henning Linden's official report of the conditions at Dachau, Linden:

. . . recommended that all German citizens living in the area of the camp be forced to walk through it so they could see the kind of government they had been supporting. This was done. At captured camps, local citizens were also put on burial details.

I'm not sure about keeping the Jews in the camps due to lack of space in the town, but you'll recall from that episode where the troops are instructed not to give the former prisoners their food and water because it would harm them. Miller share's the account of Captain John Long, with the 761st Tank Battalion, at a Mauthausen satellite concentration camp:

When we busted the gate the inmates just staggered out with no purpose or direction until they saw a dead horse recently struck by a shell. Have you ever seen ants on a few grains of sugar? They tottered over to that dead carcass and threw themselves upon it, eating raw flesh. We cut ourselves back to one-third rations and left all of the food we could at the camp. There was just one thing wrong. We later learned our food killed many of them . . .

From this incident on Jerry was no longer an impersonal foe. The Germans were monsters! . . . We had just mopped them up before but we stomped the shit out of them after the camps.