OK, The Osaka Experiment is confirmed.
I did the same thing, I made Fukui, Nara and Kytoto Soviet provinces, this is supposed to effectively cut off Osaka and the western end of Japan from the capital by land connection.
But again, Osaka was providing MP/LDR.
I thought it might have something to do with both tokyo and osaka being coastal?
But then my next move disproved that idea: I then circled Tokyo with Soviet provinces, so Tokyo is surrounded by a ring of foreign territory like I did with Moscow. Only the sea province was open. I thought Osaka would still provide manpower/leadership but now actually Osaka is 0.0/0.0, as well as any other province besides Tokyo itself.
This means that it was not distance that played a role. There is some other mechanism at play. Unless there is a bug which caused the game to fail in recognizing that Osaka was actually cut off the first time around, when I took away Fukui, Kyoto and Nara from Japan.