The puppeting itself is rather realistic. But what I'd like to see, to make it better, would be for you to be able to pick the provinces and name of the area you release yourself - and have the newly independent nation still have some partisan activity. Maybe reducing it to 25% of the original value for the puppet regime.
One fine example of the whole fighting-against-one-another deal is already set up in hoi2, actually, in the form of Vichy france. The Vichy government were essentially german puppets, and they were quite hostile towards the nations they had considered allies mere months ago. The only thing that kept them from siding with the germans was really fear of the allies and their own contempt of the german invaders. The leaders of the so-called "free france" were branded traitors in their homeland. The government dictates the actions of the people.
Historical examples of radical changes in a people's beliefs and actions can be found in pretty much any revolution as well. Just look at the october revolution in Russia. Again - the government dictates the people's sentiments, through propaganda and law. The propaganda thrown in by the puppet governments will make some people agree with them, while the threat of punishment and death will make others reluctantly assist them. It's no different than an occupied province, really, except a puppet government gives the people a semblance of independence.
Although there were few foreign volunteers in the german war machine, a large portion of their industry was kept up by foreign labour towards the end of the war. And that's german industry - not just occupied industry. Fear will make the common man do pretty much anything. The one who controls the law, controls the people. So in the Texas scenario, some would serve out of willingness through propaganda, while others would serve out of fear of punishment.
But yes, I'd like to see the puppetted regimes retain a small portion of the partisan activity.
