I'll be happy if i can see realistic resource allocations worldwide (all the resources of the world were not in Europe and USA) AND be able to mobilize the minor's population for war.
Well, that's another issue. I have the impression that most of the resources are just randomly distributed in major European/USA cities (with the exception of crude oil). Probably as a balance measure so the factories can supply themselves. In the case of minors, with a few exceptions (like Swedish ore), their capitals will frequently hold all of their resource production, which is kept to a minimum (so they can sustain their also minimal IC). Well, it got better in TFH with strategic resources, many of which are within minor's territories, so I expect Paradox will go down that road, potentially making minors more interesting.
Another problem is the population. Minors will get very small manpower, which would never let you simulate cases such as the Chaco War, which you just described. But then again I think the whole manpower system is very simplistic and will likely get an overhaul. A suggestion which I liked is different kinds of manpowers, so a minor, that has been pushed into total war (which was the case of the Chaco War), could potentially field a large, yet very inexperienced and badly trained, army, probably with huge malus to the industry and the stability of the country as a whole.
Of course, it should remain impossible for Paraguay to field a hundred thousand man army with up-to-date doctrines and equipements, even if they completely neglect all other aspects of research.
Yet if you look at the Chaco war you'll see that (excepting
Cañada Strongest - though how strong the three 'divisions' on either side of that battle were is questionable) none of the battles involved more than 1-2 divisions on either side, and most much less. I strongly suspect the "mobilised" figures over-state the actual numbers of soldier deployed to the combat zone instead of, e.g., working on the line-of-communications.
Well, could be. I don't feel it was a particularly well-documented war.
This text, which I read a while ago, claims 80 000 - 100 000 dead and 300 000 prisoners captured by Paraguay. But then apparently
The Guardian puts the death toll at 35 000 (which is still pretty high, as there were likely close to no civilian casualties...).
I doubt the American public would have wanted anything to do with a war in South America.. Only weeks before Pearl Harbour support for joining the war against Germany was around 8%.
Well, I feel like going to war in Europe is one thing, going to war in America is completely different (the Monroe Doctrine comes to mind). I'd say that the United States was much more interventionist when it came to Latin America, even in the interwar period. Although it did not get directly involved in the Chaco War nor in the Ecuadorian-Peruvian war, I don't think it'd just let a regional power like Argentina just go rampaging in the continent, no matter the political situation at the time.
If you throw in the political situation, seeing that Argentina was under a right-wing government, it had a large population of Germanic origins (among many other factors), the idea that a potentially pro-axis regional power was going rampage in South America would make intervention way more likely.
Of course, that's ignoring the fact that conquering the whole of South America as Argentina is not ridiculous in itself
As I said before, minors don't have to be stronger. You can accomplish a lot with regional powers, and if you don't bother abusing some exploits, a lot with minors too. It's just that they are not fun, they have no flavor, it's not immersive to play them, and you'd only do it for the challenge. A better distribution of resources and a better manpower system could help, without necessarily making them stronger. More interesting peacetime options and, above everything, better diplomatic and political systems could make a huge change.
Like in EU, make it enjoyable to win by reaching goals relative to the size of your country. You should be able to play Argentina and have fun without doing utterly unrealistic things such as conquering the whole of South America.
However, I do realize that it's something very hard to do, as minors have never been enjoyable in this particular series.