I would like to share some thoughts about that strategy. I encountered it just this weekend, and I lost playing the Allies. Nevertheless, I do not think it is overpowered. Why?
Let’s start with what the strategy is good in:
-Germany is obviously flexible
-Germany can deny any small naval force to approach Europe
-Germany can defeat even a huge drop force when you have like ten mech inf stationed in Western Germany
Therefore, I do think it is a rather defensive strategy. It has obvious weaknesses when attacking Russia:
As pointed out by LeClerc (who is, as always, a good analyzer), you cannot attack Russia without ground forces, and German ground forces cannot approach Russia if you have not bought additional units. Russia buys mostly inf and art and waits for the German to come one step too close. You can of course sit and wait until your economic gains from the Russian territory and the bombing raids on Moscow allow for a save approach, but: I do think there are other strategies to allow Germany to defeat Russia late in the game – that is not overpowered.
Moreover, Anit aircraft comes in handy: assume you have Bombers/3 AA units. They fire three times at 1, thus, are better than inf, and they hit a plane, not a mech inf. They only shoot once, but all inf I could buy instead would be killed in the first round and, thus, also only shoot once.
So, Russia can hold out for some time. In our game, we tried to invade Europe and had a huge force assembled to counter the German bombers. That force could participate in the attack, so we were able to easily take Rome. The problem I see is that if you cannot achieve more than taking out Italy before Moscow falls, the German player has enough to counter US and GB if he focusses completely on them. But you could either be more successful with your D-Day, or you just send everything to Japan. So: not overpowered.
I should add that we do not play with victory cities or bids.
