Firstly, a dodgy sourse on my part. The native population of Madagascar was 2.2 million in 1900, not 1940....As has been pointed out though, this is indeed the Nazis we are talking about so population movement is by no means out of the question.
As to the map, if you think its feasible(given the billions being pumped in), then I'll go along with it.
Well the Nazis would be dumping Jews in the North as its a) shorter distance from the Suez, and b) where all the good French built ports are.
They would then have to evict the Malegasi from the Tsaratanana Massif in the north in order to obtain food and water, or rather brutalize them sufficiently that when an independent Jewish state emerges it will be unable to make amends with the Malegasi there and will have to evict them. The main area of jewish settlement will then be on the Massif and coastal towns (the very dark green area in the north).
When push comes to shove in the early 50s (the Malagasy Uprising occurred in OTL '47 after all) they Jewish forces, unlike in Israel, will not really be able to penetrate the central highlands or the eastern coast. It took considerable French force in the OTL, and they were prepositioned, and the natives were exceedingly divided. However I think it likely the Jewish forces will be able to secure the lightly populated north-western coast (which is also very suitable for cash crop plantation agriculture) that can be easily reached from the sea and not from the central highlands, the southern boundary of this region is where the more serious deserts start. I expect at that point the Western powers will tell the Malagasy to 'shut up and make do' with the 60% of the island remaining to them, and some pleasant ethnic cleansing and decades long feud will develop, if vastly better than OTL Palestine Israel.
The verdant Tsaratanana Massif is roughly the 1.5 times size of OTL Israel and has some of the worlds most productive sugarcane and vanilla regions (as well as a lot of the islands grain production), and the rest of the Jewish state has another 7 Israels worth of arid scrub and tropical coast. They've also managed to pick up all the oil and gas.
The Malagasy state has the pepper production, the rice growing areas and all the deserts (lucky them) and some problems with subsistence poverty, Merina discrimination to displaced coastal ethnic groups, and adequate ports.
As to feasibility, the Malagesi aren't going to become a minority due to simple population dynamics, which would be needed if the Jews still desire a definitively
Jewish homeland, and with it being an island and most of the natives really hard to get at they just aren't going to be displaced like with palestine. Plus they do already have a number of strong ethnic identities that would resist the taking of 'their' land. Thus I think an angry two state solution is really the only way it can turn out unless the Jews leave. The billions will be expended on making sure the refugees from europe don't starve or die of thirst.
OTH in a slightly nicer outcome the Jews might make good with
some of the Ethnic groups of the coast (perhaps the rather east african Tankarana in the north), and incorporate them into the state (as long as a Jewish majority is maintained), but thats just not going to work re the central higlanders which make up most of the population.