Did this fascist Austria try to make claims to Catholic parts of southern Germany?
What terrifies me is knowing what a Mussolini Italy with the support of the US could do in the Middle East. Knowing Mussolini's support for Zionism before his alliance with Hitler, he would absolutely push for the total expulsion of all Palestinians from the land. This means a much worse Nakba which has massive implications for the region especially with even more refugees in Lebanon, Syria, and Jordan as well as Egypt getting its share of them. Israel with Italian backing will definitely be able to seize all of Palestine with not even an inkling's chance for an independent Palestinian state in the area. If I were Ben-Gurion or any left-Zionist leader I'd be very terrified about the implications of literal fascist support for Israel. Fascism can easily be appealing to Israelis there.
And knowing that Mussolini will definitely support the Catholic Church, I can also see him talking the Maronite side of an alternate Lebanese Civil War with its own disastrous consequences. Can definitely see Italy propping up a ethnonationalist Maronite state in Lebanon with all other non-Maronites being forced out. And this is definitely crack territory, but maybe he can even support a Coptic ethnonationalist state in Egypt too. Not only can this mean Italy will support Christian fundamentalist movements in the Middle East similar to OTL Iran and Saudi Arabia supporting Islamic fundamentalist movements, but this can also mean that Islamism will be even stronger and more appealing. Desperate Assyrians may look to Italy for support which will make the Arab-Kurdish conflict even more chaotic. I feel sorry for the Arab Christians in this TL, being trapped between a Western colonial power backing several fascist entities and literal Salafists. Arabs are definitely not selling oil or gas to Italy in this TL for sure.
Not exactly sure what side Armenians would take though. But if Mussolini speaks out against Turkey, oof. But an anti-Turkey Italy will definitely support Greece against Turkey which means a way nastier war in Cyprus.
EDIT: Also realized that Mussolini will support the Pied-Noirs in the Algerian War and if France pulls out Italy will definitely try to fill in the void. So Algeria is screwed as well, with an apartheid-style state ruling over the place. As I mentioned before this TL will be even worse for Arabs. But then again you (PolishMagnet) said Algeria will be independence so maybe my point is moot.
EDIT 2: I could see Mussolini allowing Arab Christians to stay in Palestine and Lebanon even when he supports the creation of Zionist and Maronite ethnostates only because he's Christian and would like them around. Though them being opponents of Western-backed colonialism is going to give Mussolini a reality check and he might as well try to label them "Arameans" in try to "de-Arabize" them instead. That would have some nasty consequences too.
I read that the Alawites nearly got their own state in what's now Syria but never obtained it. Mussolini might try that if Syria goes through internal chaos and he wants to create another friendly fascist state on the Mediterranean. Also I thought about Mussolini going farther and even supporting an independent Druze state. But at this point it feels like crack territory and talking about genocide is depressing so I'd rather not go further.
Support for Zionism? Mussolini? I doubt he cared much about Jews, to be honest. Sure, jews were allowed to be blackshirts and in the party but that was more because here in Italy there wasn't much antisemitism as in central and eastern Europe (there were moments sadly, but nothing like the rest of Europe, at least in the last 2 or 3 centuries)
His support for Israel honestly depends on his relations with the arab world and Italy's political independence from Washington.
He tried several times to gain arab and islamic support and I doubt that he will try to help France in Algeria or Israel unless he is already considered an enemy from the Arab World. And a Mediterranean Conservative Power will be more appealing than the atheist Soviet Union or the Capitalist US to the Arab World (or at least Mussolini and successors would think like that).
I can see him supporting the Maronites in Lebanon, but that is the extent I see him "helping" the Pope. He was, after all, a staunch Atheist and wouldn't throw away relations with the Middle East for some christian minorities.