Actually it is a KIF strategy, as Italy will be taken out first. I fully agree with your statememt that Italy can become a strong power. However it is also the easiest to take out, sorry for not highlighting this earlier.
Ofcourse UK will play an important part in this, and the UK focus remains the Med, but gaining control of the med is not too difficult, especially because I will send the pacific fleet of the USA to the med. Against Japan that fleet is nothing, against Italy/Germany it a largish fleet that will dominate the med, it can be at Gibraltar the moment the Axis declare war. Ofcourse several blockers remain against Japan and 1 transport that will keep reinforcing Hawaii.
Also those USA bombers can help out when somehow the Axis has maintained a fleet in the med, as I experienced that there is not much more effective as destroying smallish Axis fleets as bombers.
The USA fleet in the med will ofcourse first destroy enemy fleets. Then it will convoy Italy to death, when possible (they have 2-3 transports) even take Rome as they will be supported by 15-20 bombers. Don’t forgot UK will also having an income of 35 IPC.
A nice mission of the USA transports is to pick a Russian tank + mech that just captured somaliland and libya in R5 and bring them to Sardinia + Sicily in R7
By starving Italy so decisive this leaves Germany with 3 choices
1. Try to help Italy, which helps Russia
2. Ignore the situation and go for Russia only, Rome will soon fall and Paris liberated
3. Try to do both, more likely making mistakes and spreading its power
So this is what it will like turn 4-6
Med: USA and UK fleet infested
Scandinavia: Russian land troops, several British fighters
London: 15-20 USA bombers
About Russia becoming equal of Germany
37 starting IPC, assuming DOW2
Iraq = 5 IPC - R3
NO = 5 IPC - R2
Scandinavia = 11 IPC - R3
Somaliland + Libya = 7 IPC - R5
Sicily + Sardinia = 6 IPC - R7
58 IPC at R3.
Ofcourse Germany will have taken several countries, my plan is to lure him to the South (by underdeploying) as that is where the money is for him, while I will be able to hold Leningrad. However the Southen route is also the slowest for Germany that buys me some time and with the big income can build a counter-force from Moscow which will defeat or stall him before getting to Caucasus.
Germany without Scandinavia is only 44 IPC (+ balkans), maybe + 10 from Russian territories in G3 but I doubt it. Then USA bombers start pouring in bombing industrial complexes lowering Germany income another 10.
Big Russia, big Russia, healthy UK against 30-40 Germany. It will be too much for him. Russia will start to overproduce Germany and counter-attack. This is the point USA shift focus to Japan.