@shri
I disagree. Most of these puppets, if added in a mod, would have no military so on that front it wouldn't change much. (if those that needed it couldn't have their military limited, then yes they couldn't be added sadly - but I don't see why that wouldn't be possible). The vast bulk of the British Empire army would still be India, Canada, UK, Australia, etc.
Economic boost is true, but thats potentially a minor re balancing issue. Nothing that makes it impossible especially since most of these areas would have the smallest amount of industrial capacity. Only major change would be strategic resources, but they're puppets.
Too difficult to code? How so? It could surely be modded in or expanded. This too difficult argument without any explanation keeps coming up and makes no sense. I added many countries in mods in HOI3 without running into difficulty.
Not worth it? That depends on you're perspective. If you were someone who wanted to play as one of these puppets you'd probably think it worth it.
And the ability for the axis to grab a puppet? Well they could do that either way? They would only be puppets after all so assuming the AI works, the British will still defend them as weakly as they did in reality (British Somaliland was defended by 500 native troops and with 900 reinforcements from the British). They would still be part of the allied faction so they couldn't be "owned" in terms of a peace deal before the end of the war, and the Axis could control the territory whether it was a colony or not.
Forgive me but I don't think I understand most of your reasons.
Difficulty or complication is not impossibility. Just means not worth the devs doing for release.