Right, the UK should take full advantage of the Commonwealth and have Ottawa operate as the backup European capital. At that point the UK player could help the US mount a liberation campaign from Canada or put all its resources in South Africa to help out Egypt.
I like the general idea, but it could upset the balance of the game. Sea Lion would become less of a threat and may not be good option at all because it requires a substantial investment on the part of Germany. And with Sea Lion out of the way, the UK may not need to focus on home defense so much, and may be able to send more planes south towards the Mediterranean.
On a side note, I prefer to give Persia to Russia. The 2 inf are very convenient for taking Iraq next.