The other big question with regards to Europe is how the German-Soviet War goes. The Greek and Yugoslav campaign OTL pushed Barbarosa back a little bit, but weather also had a good part to do with the delay.
Per Wiki:
According to Robert Kirchubel, "the main causes for deferring Barbarossa's start from 15 May to 22 June were incomplete logistical arrangements and an unusually wet winter that kept rivers at full flood until late spring."
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The Germans will have more men and resources to send east, but the timetable won't be all that different.
I can see the Italians entering the war opportunistically towards the end. They'd open a third road to Berlin. Austria will undoubtedly be an Italian satellite, but the question of South Germany (Bavaria especially) is more open.
An independent and neutral south Germany, like OTL Austria, wouldn't be an unreasonable outcome. You get the benefit of a neutral buffer and a weaker Germany - in the Roosevelt, Churchill, and Morgenthau plans the idea of establishing a united and separate south German state was put forward. I can see Mussolini supporting such a thing.
Hungary's attempt at defecting to the allies may be more successful. Germany will try to occupy the country, but the Italians are right to the south and can help defend the place. I can see Hungary either turned into a neutral state post-war of divided along the Danube between an Italian West Hungary (capital Buda) and a Soviet East Hungary (capital Pest).
I wonder if Romania will be partitioned between an east and west Romania. Italian Wallachia, Soviet Moldavia-Transylvania?
Without having to push into Romania and Bulgaria, perhaps the Soviets manage to get further west TTL, dividing Europe along the Elbe. Alternatively, with the Germans spread out more and the British and Americans having more men to focus on the continent, the east-meets-west point could be further east.