It is not implausible. Men were executed during the Caporetto retreat, as was common practice in the Italian Army at the time. Still the lower ranks were far more likely to be summarily executed than the higher ones. The common practice in fact dictated that the responsibility for choosing the men to be shot fell to the commanding officers, who were not likely to pick themselves. In principle though nothing prevented a Division General to sentence to death a Brigade General; as Cadorna himself had pointed out that disciplinary measures had to be carried out at any rank. In practice though, as the higher ranks were often removed from action and therefore came into contact with the issue only after the Commanding Officer in place had had a chance to re-establish discipline, their role was to determine whether enough death sentences had been carried out; if the number was deemed insufficient, the Commanding Officer would be removed from command, sacked or even sent to a military court (for example in the case of the Catanzaro Brigade mutiny, 32 privates were executed; 135 put on trial; 436 privates and 33 officers were removed). This also offered a “guilty” officer somewhat of a way out from non glaring responsibilities: that of executing a few men.

Anyways I can't find any specific case detailing the execution of Officers during the retreat. Caporetto was a big mess and we can't expect to find detailed paperwork for any disciplinary measure undertaken. The Caporetto inquest (of the following year) offers some further information – unfortunately I don't have access to the whole document. So we know that on November the 2^nd General Andrea (not Rodolfo) Graziani was put in charge of keeping discipline and order throughout the retreating front: an herculean task that Graziani undertook with energy and – we may say – enthusiasm. His measures for keeping an orderly retreat involved “removing a wheel” from any car that he thought could fall into the fugitive men's hands. His activity brought about 34 summary executions in the first days of the retreat. Of one example – dated November 3^rd – we have Graziani's own recollection:

I was standing in my car and saluting back any Platoon Commander [the men were marching in front of him]. The troops moved orderly and quietly; when suddenly I heard from the new section men repeatedly address a comrade: “Take out your cigar, take out your cigar!”. I looked there and saw a man who, with a cigar stuck in his mouth looked right back at me, grinning defiantly. I weighted the severity of that gesture, against a General who had the audacity of impose the return to order and discipline. I weighted the necessity, according to my own consicence, to give immediately a terrible example, to persuade the 200,000 who had broken ranks that from that moment on there was a force, mightier than their anarchy, that would have bent them to obedience. Jumping from the car, running through the ranks, I beat that soldier on his back with a cane. Halted the march, after having him bounded by the Carabineers in my escort, I immediately had him shot, against the wall of a neighboring house.

It is therefore evident that extreme disciplinary measures weren't unlikely. At the same time, I would not consider Hemingway to be a reliable source on the issue by himself; unless he provides a specific case that can be checked. As I mentioned Caporetto was a big mess and, unless he claims to be a direct witness, there is a chance that he was influenced by the many bizarre tales that spread in the retreating army. That Cadorna had Killed himself; that Lt. General Capello (Commander of the II Army) had been arrested (he had been absent from the front as he suffered from a severe kidney infection); among these sure there were tales of executed officers.

 

My main source here is P. Melograni's Storia politica dell Grande Guerra.

If you are interested in a more general picture of the disciplinary measures on the Italian front, I added something I had put together on the practice of “decimation” in the Army; and that I don't have time to re-edit together with the previous part.

 

Here the issue appears to be one of definition. In the English world decimation appears to be a kind of zebra, while in the Italian language it takes the form of a horse; it's less monstrous, and more common.

In its Roman origin – of which I know very little – it seems to have described the practice of selecting for execution ten men out of a group of one hundred. As the Italian Army did not employ such even numbered units anymore, selecting 10% of the men made little sense.

What the Italian penal code traditionally admitted though, was the idea that a man could – and should – be punished for inadequate performance; and that the most severe cases of under performance could be punished by death. Significant example that of General G. Ramorino, executed as traitor after the defeat of Novara, for failing to perform the assigned maneuver.

In light of this any officer was responsible of the efficiency of his men: to keep that, he was not only allowed but required to perform summary executions, wherever units lacked in their performance – this without any burden of proof, that could not be conceivably collected in the immediate; but even where no immediate urgency prevented an inquiry, such executions were allowed.

This offered therefore the legitimization for the executions of any number of men, randomly selected from an under performing unit. Such practice – if different from the Roman one – was in fact referred commonly by the Italians as decimation.

As evidence of this, consider Luigi Cadorna's letter to then Prime Minister Antonio Salandra (January 14^th 1916): It is unfortunately deeply rooted in the minds of the soldiers and within the country, the idea that, ended the war, the Government will proceed to grant large indulgences, so that sentences to life imprisonment or military jail no longer intimidate the badly inclined; who, on the other hand, would rather be sentenced than face the dangers of the war [...] During the time of war therefore, only death sentences can have compelling power [...] but in many processes the evidence can be at most circumstantial, and therefore military courts can not – as it would be otherwise healthy – pronounce exemplary death sentences. It is therefore fiercely deplorable that our new penal code does no longer allow, in cases of grave collective crimes, the faculty of decimation of the guilty units, that was by far – during wartime – the most effective measure to keep the unruly in line and safeguard discipline.