Of course, everything I complain about is plausible and technically all correct, but I just think that a bit of creativity might be nice. Im not familiar with the late nineteenth century German- or Italian! Hungarian! or British, even- engineering scene but it is a little odd that exactly the same person would invent the Airship.I don't think Zeppelin would be butterflied away. He was born before the PoD AFAIK and his immediate surroundings wouldn't be too different. As far as the German navy is concerned, Wilhelm II was not the only one who wanted a big navy. There were anumber of important people in Germany at the time who wanted a navy. I'd argue that with a large colonial empire and lots of prestige (and a possible rematch against Britain), the impetus to build a navy would be even bigger.
On navies, I agree that Germany would build a larger navy but I heartily disagree that Italy would have half as many ships as its larger ally.