Sir miech,
In reply:
Your glorious plan- I wish you luck as Italy. I'm dying (hopefully not) to see what you'll do.

'rules regarding Italy-France and Italy-Vichy France' Italy can do what they will and so can France. Italy can go all out against France right away. France could then counter artillery-attack the neighboring Italian provinces, as they did and can do against Germany. I suppose if their artillery did well, they could then invade Italy proper. France had lost their flowering of their youth and didn't want another casualty laden war.
'And Italy- UK/Egypt?' You against the U.k. is pretty simple. You're a neutral until you attack Poland, France, Greece or the U.K. in Egypt. Then it's WW2 as usual. France or the U.K. may not attack you 1st.
Some information & words of warning. You will (should) have 4 BBs to start the game. Britain is a naval super power and has 10 (+ 1 being refurbished in England).
'The armor rulings seem great - does that mean we see mostly arty battles now?' Now this is my opinion of course, but there will be raging artillery battles. People please remember that although artillery seems overpowered (they fight at a 2 / 1.5 from a distance, they only have 10 hit points (inf.=15 lt.armor =20) and will wilt if contacted. Furthermore light armor attacks them at a 3 (arty.=1.5), so all the enemy has to do is 'lock them up' to kill them. Even paltry infantry attack artillery on a 3 (15 hit points vs. artillery's 10) and they WILL catch the artillery. Artillery is a useful tool, not a super-weapon. Just charge straight at said artillery. It amazes me how players can't figure this out.
'Perhaps there are still too many plane options' I believe that the airplane restricted builds will tone the normally overpowered air battles. 1 lvl 1 factory will yield 1 24 hour to produce fighter per turn- that's 2 per year, per factory (most countries = 2 aircraft x 3 industries [x6 aircraft] per year. Britain can only produce 42 fighters during the entire 7 year war. Probably only 38 fighters & tacs when considering a tac bombers 1 day, 6 hour production rate. Yes, I know lvl 5 factories make industries build 50% quicker. In other games Britain would have produced a good 150+ aircraft. Also Germany still has to split their Luftwaffe between 2 or more fronts.
Now when the Americans EVENTUALLY show up with
100+ aircraft, please remember that they produced 104,000 aircraft in 1944 alone!
suggest a tweaking, Id say beef up armor by 1 Don't take offense to this sir miech, but the armor industrial limit is specifically geared to yield the maximum historical amount of armor that each country could provide. This is calculated at the fact that a Corps, which is what CoW is using whether they acknowledge it or not, has about 600 tanks in it. If any nation produced more, like what a 2 armor production ability for the U.K. or 3 for Germany would yield that would be impossible. We have to remember that the U.S. & U.K. only had 5 armored Corps. Germany's forces were still about 75% regular infantry.
If they COULD have produced more armor, they WOULD have. They knew the value of armor.
and reduce the planes for the majors by 1 or 2. As to less I think it boils down to how many aircraft are in each air unit. I think it is about 300-500 aircraft. If we cut each countries aircraft production down to 2, they would never achieve the historic 1943 German @ 24K and American @ 87K numbers. We should almost increase them to be realistic.
As far as too many aircraft, if we allow 4 or even 5 aircraft production ability, we'll be right back to the 70 - 100 squadron fights that I've seen in our previous games -yuk.
Those sized air forces just ahistorically rule the game, and the players that use them know it. 45 fighters protecting 35 tac bombers crushes anything they meet, other than a 5-6 AAA supported stack. Now the American might have said air force in 1945; poor Germany (& Italy) 
For France in particular 1 for armor... ['best tanks' etc.]. If France were a normal country (like the U.K. or Germany), yes, they would have monkey stomped the Germans from the get-go. They suffered from so many shortcomings and misusage it boggles our modern-day thinking minds.
The main problem was that the French Army thought that infantry would rule the day. Therefore French tanks were spread out among all the divisions as slow infantry support. Tanks were rarely massed & used together.
- Their command structure completely hamstrung them. The main French General's chateau was secluded & cloistered 100 miles from the front
and didn't even have a radio
- They had few crew. This meant that the commander had to be the loader as well as the coaxial machine gunner. There was no ability to 'bore sight' the opponent.
- They operated in cramped compartments. Watch it or you'll get your foot cut off when traversing the turrent.
- They lacked radios- this is super important; perhaps one of the Soviet tanks main failings.
- They had ok morale, but their officers, from lieutenant to colonel had little armor training.
- They were a traditional army, again without good radio communication for quick reaction. The Germans were trained to take initiative. The French had none of this.
- They had little to no armor theory. This is just about the main reason that the Krauts did so well.
- Their tanks were slow (R-35 @ 20Kph)
- 2,800 of their tanks were poor- see 'Renault FT' & 'Hotchkiss H35' specs. <-- yuk. The 37mm l-21 gun was very short and had poor penetration.
- They preferred to fight on the defense; this hindered their overall usefulness. Again this was the new national strategy of 'defense 1st,' as opposed to pure offense in WW1.
- high fuel consumption. I.e. poor operational range (Char B = 200km range). The term 'Divisions Cuirassées de Réserve,' were—despite their name that merely reflected the fact that they had originally been planned to be raised in a secondary mobilization—not very effective as a mobile reserve and thus lacked strategic flexibility.
- French armor was backed by poor leadership.
- No use of exploitation. Their armored exploitation phase of a battle was seen as secondary and best carried out by controlled and methodical movement to ensure superiority in numbers, so for the heavy tanks also mobility was of secondary concern.
- For proof of their problems, the Germans pressed a number of the 'good' Char1Bs into service. They either put artillery guns on them, flamethrowers or just used them against partisans.
and 4 for planes seems...off Aircraft actually involved in the Battle of France:
- French Armée de l'Air had 1,562 aircraft
- Germans 2,935 aircraft.
The French aviation industry (with modest assistance--about 15 percent-from American and Dutch producers) had produced enough modern combat aircraft (4360) by May 1940 to defeat the Luftwaffe, which fielded a force of 3,270.
The French had only about one-fourth of their modern combat aircraft in operational formations on the Western Front on 10 May 1940. It was said that "the french were defeated by politics, not the Luftwaffe." Duhhh 
"At the armistice the French air force was still stronger than it had been on the 10th may"
Horne - To lose a Battle - France 1940.
So I looked this info up (longggg & BORINGGG reading I'll tell you!) We'll back the French Aircraft Production back to 2. Here's the explanation of problems in French Production:
- "Chaos ruled in nearly all French aircraft factories. The problem was accentuated by the Popular Front’s nationalization effort of the mid to late 1930s. As a result of those two factors, France’s aircraft production actually fell during these years. Between the spring of 1937 and the first three months of 1938, French factories were producing an average of forty units per month. Five less than in 1936, the year the Germans overtook France in sheer number of available airframes."
- in January 1940. Also by that time, the aircraft industry was producing planes at such a high rate that spare parts manufactures just could not keep up with demands.
- Vested with new powers and an even bigger cache of funds, Monnet arranged for the acquisition of 4500 new airframes. Unfortunately for France, the delivery of all these newly purchased aircraft was painfully slow. When the Germans finally attacked, only 200 of these units were actually deployed and ready for combat.
* vomits all over self in gaming chair
from having to look up so much French pre-war production values...