could you hit somewhere, say in west or south Africa, where you should have good supply but hopefully their logistics are seriously overstretched and you can inflict very heavy casualties on them.
Yes, I can see me easily sweeping across all of Africa and even reaching Suez. Problem is just dropping off guard units along all the Med shores means I got quite a small army once I enter Iraq. The alternative is to do a masterful airborne landing on empty Gibraltar with immediate extraction to so be able to get my fleet thru - which can then protect the north Africa shore from enemy amphibs. I actually have the airbase at Lanzarote (Canary Islands) and long range TRA to accomplish that. But I keep thinking of 100 panzer divisions working their way around Turkey to eventually crush my meager forces which probably would reach Iraq. But at that point there is 100 Indian divisions to hit me in my flank. I can't even use the Canadians as they now guarding England since I pulled out my USA forces. Germany doing a massive airborne assault is a definite possibility.
Alternatively can you do anything by espionage to subvert some powerful puppets? There must be some pretty large ones, unless Germany is holding large areas as subject populations which would seriously affect their TC.
I wish I knew how. I can easily increase my spies in any country. But I don't know how to get a puppet to fold.
There certainly are some very huge puppets:
India 55 divisions with 1 spy but I remember it was at 100 when I flipped game,
China about 200.
Japan has 216 divisions as per my 7 spies (AND 48 top-of-line INT).
Germany has 544 INF, 94 ARM and 64 INT (as per my 30 spies that will be right on). And they building CVs in sets of 3 but I managing to sink these fast as they appear.
The other option is nukes. One of the big weaknesses in the game as I understand it is while a nuclear strike will seriously and pretty much permanently trash a province if that's a capital it stays there, with disastrous impacts on supply and support rather than letting you, or the AI, move to an alternative location. Of course, with a Germany of that size and by this date they might well be able to retaliate in kind.
I got level 5 nuclear reactor long ago, and have been funding nukes 100% since I got Waste bomb. Now I doing Fission bomb (the 3rd level) and it is at 60%.... but in all that time no nuke yet. But I can't increase reactor size until 1951 Basic Nuclear Power achieved. Now May 1947. I wanted to drop a nuke on Bermuda where there are 34 Axis divisions, but decided nukes are too scarce to use like that. Better let them starve but, in spite of the constant convoy hits
(getting sometimes 5) they not out of supplies. Guess Germany, with 755 IC can easily replace the losses.
The Japs have barricaded the Hawaiian Islands and Wake, but I just ignore that. No threat as Japan has very few ships left. However, I getting some occasional indication those supply depots sometimes have no supplies, so maybe I can starve those units eventually.
I been doing serious "delay tech team" on Germany and they have not started any nuke bomb technology yet. I imagine they do have a level 5 reactor. But going by how long it is taking me with 100% funding to get the A-bomb, I guess Germany won't for next few years.
I was worried about them rocketing UK to smithereens, and they have ballistic missile now. So far not a single rocket fired... possibly they lack MP to blow it up like that. .
Earlier I did a major strategic bomber campaign that seriously hurt German MP. I knocked their IC back by 100 IC, but also noticed them starting to fly rather weak air stacks. But I stopped the campaign because it was costing me so much MP. Now I finally able to construct 3 ARM lines.
I just liberated Australia and moved the USA army to Philippines. Thinking of taking the Jap Home Islands as there the enemy can't hit back at me.
If I annexed Japan would his puppets of Manchuria and Nationalist China quit the war? If so, then I could probably annex India before the Wehrmacht could interfere. I really need to worry about China and India protecting each other... make a plan to get those 2 eliminated .
In answer to your original question afraid I have no idea.

Gut feeling is that the larger state will have greater manpower and resources and be able to research faster but could be wrong.
I did both. Sarawak already built an INF so now Borneo is guarded and I can get back my unit there. Also it is now usable for free replenishment. Indonesia needs build too many INF to get its main islands all manned so they will then pump supplies/oil to them. In the long run, Indonesia can only be less by the amount of Sarawak... which Sarawak should compensate for. But you might be right.