Annexation is best.
There are zero partisan issues once a peace treaty is signed. The Soviet Union? The partisans go home and take a nap once Stalin throws in the towel. You still get 100% of factories and 100% of resources (at your tech levels!) with no sabotage.
There's little manpower to get from non-core territory, but who cares? I can always conscript more people from my cores at a penalty to factory production. And does a 30% penalty to factory production matter when I just added 100 factories by annexing a major power?
Puppets will have worse tech, worse division composition, worse leaders, worse production, worse AI, and worse everything than if you just own the land yourself.
If partisans were still active after signing a peace treaty, I'd change my mind.
Which makes me think that overlord nations should be able to share tech with their puppets, to at least allow puppets to field armies that are relevant.
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