In my games, Italy is used mainly to defend. If a tanranto raid happens, the Egypt is practically mine since the Brtish NEED to bring the gibralter fighter to the fight, and if the aircraft carriers is destroyed then the fighter is dead anyways. I clear the rest of the British fleet and secure the Med.
Depending on how Italy is doing, I may or may not send the tank and mech from Tobruk with the inf and arty in Libya into tunisa to get the north africa NO.
Its far more important to get the Middle East, to collect the money there, and threathen both Calcutta and Stalingrad.
But once Italy has around 30 IPCs per turn I start sending Infantry and Artillery into Paris. If the Americans and British land it lets me counterattack easily. With Italy defending europe, i let the Germans focus 100% on Russia.