So I've never had a problem capitulating Ethiopia as Italy. For supply, first I set the southern one of the two Eritrean supply depots to double-trucks, which will keep supply a little over half the way to the capital. Then once Aussa gets annexed by event, push for the one province directly south of it, which has a supply hub. Build a railroad from Eritrea to that, set it on double-trucks, and then you've got enough supply to get the capital, plus more if you need to because they didn't go Boarding the Train.
One more wing of 100 tac bombers won't cause an additional level of escalation (if you were even worried about that), and that plus the initial Eritrea army and planes are usually quite enough to push and capitulate them by July or August. Actually enough to capitulate them by May or June, but there's a missiolini that fires in July (at least, it does if you fail one of the first two, might be earlier if you succeed both) that gives you nice rewards for capitulating them after it.
One more wing of 100 tac bombers won't cause an additional level of escalation (if you were even worried about that), and that plus the initial Eritrea army and planes are usually quite enough to push and capitulate them by July or August. Actually enough to capitulate them by May or June, but there's a missiolini that fires in July (at least, it does if you fail one of the first two, might be earlier if you succeed both) that gives you nice rewards for capitulating them after it.