I think Karelia and the Ukraine would fall anyway. Russia could put a troop in Archangel to prevent a blitz, and in any case, Russia could easily take it back. Even if Germany takes Norway, I don’t think it’s the end of the world.
Depending on where Germany’s fighters and subs are, the Allies would have a couple of options. 1) The UK could take Norway back on UK1 depending on German troop locations . Or 2) The US could take Norway on US2. The Allies would run into problems in Africa, but the US could still be in Africa by US2 anyway. It just depends on what Germany does with its air force and subs. If the bomber fights in Egypt, it would likely land in Libya. If that were the case, then Germany would likely only have two or three fighters in Western Europe. If that were the case, the UK could do its naval build in SZ8, and by the end of US1, the allies could have 1 battleship, 1 cruiser, 2 destroyers, and 1 aircraft carrier with two fighters in SZ8 to protect the US transports. If Germany consolidated its whole air force and all its subs within range of SZ8, the Allies would obviously have to go with a different strategy.
What are your thoughts on a US IC in Norway on round 3? There could be some use for that. And if Germany wanted to fight over it, well, the Allies would build their invasion force up until they could take and hold it. And, if Germany is sending units north, then those units aren’t going east, and that’s good for Russia. Also, with Ally forces in Norway, it would put a serious dent in the Axis’ ability to hold Karelia, which is vital in order for them to get 9 victory cities.
Again, there are a lot of ifs here, but it’s a scenario that could play out.