Italian events
Here are a couple of ideas.
1) Something to put more restrictions on Italian oil supplies. If you play from 1936, Italy has no problem trading for a huge stockpile of oil. But historically Italy was incredibly short of oil. The Germans monopolized the available oil from Rumania and Hungary and so on. I seem to recall that the Italian Navy only had 15,000 tons of fuel supplied to them in 1942 . . . which would be maybe 150 oil points. This was a major reason why the Italian fleet couldn't use its numerical superiority to close the Med.
I have a bunch of useful source material on this but unfortunately it's all boxed up in the bottom of a very crowded storage locker. Anyway, you could just track the Italian oil pool and come up with some reason for Germany taking oil away if they're too aggressive in prewar stockpiling. (Make it a choice for the German player, and involuntary for the Italian. It'll liven up those multiplayer games.)
There's probably no way to simulate the exact problem, because the game doesn't distinguish between bunker oil for ships, diesel for tanks and aviation spirit for planes. But you should be able to damp down Italian enthusiasm for naval war a bit.
2) A better simulation of the Italian defection from the Axis in 1943. Within the limits of the rules I think it would go something like this:
(a) Italy makes a separate peace with the Allies
(b) Most or all of the Italian forces are randomly deleted
(c) Germany declares war on Italy
(d) Territory in northern Italy secedes to Germany
Even better would be something to represent the RSI, the puppet regime Mussolini set up after being ousted in 1943 and then rescued by Skorzeny and his commandos. For that matter, how about an event to represent Mussolini being rescued . . .
There's a simplified version of this in Bolted 1.02; in that version Germany just inherits Italy as a whole, no independent Italy joining the Allies. I think the reason Bolt went with that approach was because the Italian army never really got on its feet again -- mostly they formed construction troops and some static guard forces for rear areas. However, as I recall the Italian fleet defected successfully (losing some ships to German air attack on the way), so they would have had some significant assets.
On the other hand, the RSI definitely did have some troops -- marines, paratroops, some militia -- and probably about one air wing's worth of fighters. You might try this sequence instead, whenever the Allies land in mainland Italy:
(a) Randomly delete a large number of Italian units (say 25 or 30 percent of whatever number are likely to be active at the time)
(b) Make a separate peace with the Allies
(c) Force the government to change to democratic, oust Mussolini
(d) Use the "civil war" command with the RSI in the revolt file to break the remainder of Italian territory and forces into two parts
(e) Make the RSI join the Axis and declare war on the Allies
(f) Make Italy join the Allies, declare war on the Axis, and grant access to whatever Allies are active (you'll need separate events for each power)
(g) Test for whether Mussolini is rescued by Skorzeny's commandos and becomes head of the RSI
It always surprised me that there was nothing provided in the game for this, since the Vichy event sequence was so carefully set up. It would be great to have.
If you can get this working, then the next logical thing to deal with is the effect on the Balkans, assuming Italy has any conquests there. Historically huge numbers of Italian troops defected or were captured by partisans, giving the Greek, Albanian, and Yugoslav partisan movements a big jump in strength. They became a serious problem for that Germans at that point, instead of an annoyance.
I don't know if it's practical to create Greek or Yugoslav partisan republics (I hear the independence command isn't working properly), but the nice thing about having an outright civil war is that if the Italians do hold part of the Balkans, the Allies will likely get a free foothold there . . . it'll simulate the Yugoslav "liberated area" around Split in 1943-44, where they had British troops and planes supporting them, and deliveries of tanks and artillery, and so on.