With a POD no later than 1700, how can the fates of Italy and the region of Yugoslavia be switched (i;e Balkanized Italy, fully or partially unified Yugoslavia)?
"Balkanised Italy" is easy. Napoleon III refuses to give Sardinia support in uniting Italy and the Peninsula remains divided into several smaller states.
OP says that not POD later than 1700.
It is very easy to keep Italy divided with that POD. Not Italian nationalism and foreign powers, speciality France and Austria, not allows unified Italy.
With a POD no later than 1700, how can the fates of Italy and the region of Yugoslavia be switched (i;e Balkanized Italy, fully or partially unified Yugoslavia)?
It hardly can be switched because of the most important factor in History : geography.
Italy is a peninsula, though a central one on the mediterranean point of view. The Appenines apart, communications are not too complicated.
Yougoslavia is in central Europe and was often invaded. And its grography is more fragmented.