Yup, this all sounds fun.
You can just add 2 or 3 infantry and 1 or 2 small boats to the Dutch East Indies if you want and call it a day; that’s thematic and won’t unbalance the game.
Taamvan’s idea of merging all of the various minor Allied powers into a “Free Forces” player is also interesting. It gets at what I see as the core problem: there are several nations whose economies are so small that they don’t mesh comfortably with the pricing structure for Global 1940 units. For example, French North Africa + Central Africa + Madagascar + Syria + Indochina = 10 IPCs…not even enough to buy a minor factory, even if the rules allowed you to collect income or make purchases without a capital. Holland + Congo + Java + Sumatra + Celebes = 15 IPCs…enough for a factory, but not really enough to buy a navy that can accomplish anything against the Japanese. You’d much rather have those IPCs going to the British (or ANZAC), because the start-up costs are too high – if you’re trying to buy a factory, and then some infantry, and then some planes, and then a carrier, and then a transport, well, by the time you can afford all of that, your transport won’t be landing troops anywhere until turn 8, and if you try to skip any of those steps, then your fleet gets sunk or your factory gets captured. ANZAC already starts with some infantry and an air force, so when they earn income they can get it into play much more quickly.
One way to handle this is to mush the French and Dutch and Norwegians and Polish together, so that they all add up to one efficiently-sized power.
The other way to handle this is to scale down part of the Global 1940 economy that deals with minor powers. Infantry and artillery are already affordable for minor powers; the problem is boats and factories. So, make those cheaper and weaker for small powers!
A “patrol boat” costs 5 IPCs, attacks at 1, defends at 1, carries 1 infantry, and moves 1 sea zone. A “training camp” costs 6 IPCs, can be built in any originally owned territory, and can build up to 2 total units each turn, all of which must be either infantry, artillery, patrol boats, AA guns, or fighters. Training camps are destroyed if they are captured by enemy land units. Training camps may be bombed as if they were minor factories; like minor factories, they can accumulate up to 6 damage and lose one point of production capacity for each point of unrepaired damage.
The only minor powers are France, Holland/Belgium, and China. Minor powers can collect and spend income even when they do not have a capital. Only minor powers can build training camps or patrol boats.
After having its capital looted, France becomes a minor power for the rest of the game and follows all of the ordinary rules for a minor power. Liberating Paris does not restore France to its status as a major power. In addition to its usual starting units, France starts with a training camp in French Equatorial Africa.
Holland/Belgium is already a minor power at the start of the game, and owns Congo, Java, Sumatra, Celebes, and Dutch New Guinea. Holland starts with an infantry in Java and Sumatra, a patrol boat in SZ 44, and a training camp in Dutch New Guinea. ANZAC’s national objective can now be fulfilled even if Dutch New Guinea is controlled by the Dutch. Neither the UK nor ANZAC may “nationalize” Dutch territories, although Dutch territories are Allied territories, and so the UK and ANZAC (and America, once it joins the war) may freely land fighters and other units there.
China is a minor power at the start of the game, and in addition to its usual starting setup, China also starts with training camps in Yunnan, Szechuan, Sikang, Shensi, and Suiyuan. The “special rules” for China no longer apply; China is just an ordinary minor power. Yes, this means China can now build artillery or fighters on any turn that China can afford them, and it means Chinese units can roam freely outside of China – but it also somewhat limits China’s ability to deploy units to arbitrary new territories.