I’m impressed with this setup; I like the way you’ve made it possible yet not necessarily desirable for players to manually recreate a position similar to the starting 1940 set up. I think you’ve given everyone some fun new options in a way that’s balanced and interesting. Kudos!
My only serious complaint is that for me a big part of the appeal of a 1939 setup is that Germany can choose whether or not to provoke England and France into war…and that England and France can, in turn, choose whether to convert an act of war into a reason to invade! I’m not seeing that here; it looks like Germany starts at war with France and England.
I would want some set of add on rules like this: Germany, France, Italy. and Britain all start the game at peace. Germany may declare war on Britain and/or France at any time. If an Axis power invades Poland, Britain and/or Grance may declare war on that power. If an Axis power declares war on France, then Britain may declare war on that power. Otherwise, Britain and France may freely declare war on any Axis power beginning at the start of turn 3.
Britain gains a new NO: while not at war with any European power, it collects 2 IPCs for each of Norway, France, and Poland that is under Allied or pro-Allied control.
France gains a new NO: while not at war with any European power, it collects 5 IPCs.
Germany gains a new NO: while at war with at least one European power (including Russia) it collects 5 IPCs.
Something like that.
Also, a minor nitpick on the initial setup: I’d rather remove the starting Russian factory in Volgograd instead of removing the one in Kiev. Kiev was industrialized earlier, and starting with the factories up near the front and having to build some in the east later gives more of the flavor of ‘retreating’ Russian industry.
Finally, this setup might work well with the Dutch minor power rules being discussed right now in another house rules thread. With more time (maybe) before the war starts, the Dutch might be able to do something interesting! And they would start with control of Holland in some games, which is also interesting.
Anyway, this scenario you’ve written is fun and I hope to try it sometime!