I agree with most of your points Chris.
If germany has decided to build/maintain a baltic fleet they must build surface warships. And I also agree Sea Lion is unlikely but it does become something the UK must protect themselves against - potentially diverting attention away from the UKs preferred strategy (whatever that may be). Germanys income will grow dramatically while the UKs shrinks dramatically over the course of the game if Germany spends 10-15 income a turn to maintaining parity (focusing on defense) with British atlantic assets, they can still maintain an economic advantage over the USSR, while the UK must adjust to the possibility that a sea lion -might- occur.
A determined British player might still be able to wipe out the fleet but it will be at significant cost - costs that by mid game the UK may have difficulty absorbing. now if the US are determined to build an atlantic fleet then the equation changes somewhat…
The virtue of an
atlantic baltic fleet as I see it is the ability to transfer 2 units per transporter much closer to the -russian-front each turn, while adding a strategic threat that the UK has to concern themselves with.
to be frank this is theorycraft I havent seen how it work in play, but I think its something I’d like to try one day. (ideally not against people who I have told in advance I was gonna try it