I loaded up the Soviet campaign. My comp won't let me take direct screenshots, but I made a quick sketch.
This is Europe after the first Soviet mission, gassing a town in Poland.
Iceland and Switzerland are the only neutral nations. No distinction is made between Soviet allies and Soviet occupied territory in game, the color change is my emphasis. However, none of the Soviet Republics are shown.
So:
1. Ukraine should not be a separate nation.
2. All of Europe quickly allies against the Soviet threat.
3. It can be assumed that Soviet-occupied countries are absorbed as Soviet Socialist Republics (Romanian SSR, Bulgarian SSR, etc.) Maybe some events for this?