I would have thought the Entente, considering the great importance placed on trans Mediterranean traffic, would at the very least goad the central powers into action.
I don't necessarily disagree with you that Italy would tip the scales towards the CP, at the last more so than their joining the Entente, i dont think that victory is so matter of fact.
Wouldn't Italian ambitions towards Corsica and Tunisia require naval action and the Germans purpose in the Mediterranean was to disrupt French traffic from Africa so i would imagine that fleet action is more likely than in areas where the idea of the "decisive battle" was more applicable.
I did a ATL with Italy not joining the war. I reviewed units as the corp level. I can assure you that Italy joining the CP means the CP wins. Italy had around a half million military deaths, and probably around 2 million total KIA/MIA. Now instead of A-H taking losses to stop Italy, it is now France. Can France handle a additional 250,000 to 400,000 dead? Can France handle another 750,000 to 1.2 million wounded? We then need to repeat the exercise for Russia, but make the numbers larger since the French army is better than the Russian Army. The only real question is if it is a quick French losses or a slow one. We have had threads on this topic, and a lot depends how many troops France needs to hold the Italian border. Some argue that it could be as little as a handful of corp of second class troops. If so, then there is a chance the Race to the Sea only goes a little better for the Germans. After all, just because France has 50,000 troops less in Flanders does not mean the Germans automatically find and exploit the weakness. However, if it takes the French as few as 300,000 troops to hold the border with Italy, then the French will be missing a couple of armies. At least one is in Flanders, so there will be a really big hole between the BEF and French forces. The Germans will be able to take at least portions of the Channel Coast by walking there. Roughly speaking, the most likely scenario is the BEF bottled up in Calais and surrounding areas and the Germans holding the Marne/Somme line. The French will fall apart before Russia can force action in the east in May 1915. From the ATL perspective with Italy joining the war, it really hinges on how daring and talented the French commanders are in the south. If the French try to hold with a bare minimum of forces (single regiments holding passes against corp size or larger elements) and it works, the war might drag on into 1917 before France collapses. I consider this an unlikely outcome. If the French fail with the previous strategy (the Italians break through the passes in the Alps), the war will end and French morale collapses, and there is a panicked transfer of multiple armies to Southern France. If you see more than 250,000 additional troops in Southern France, the Germans will gain the Somme/Marne line.
It is not that I doubt the UK/France will try to force a battle at terms favorable to the Entente. But much like Beatty running his ships near to the German coastline, the UK may wall try to draw the Italians out. I just doubt the Italians will come out, since it happened so rarely IOTL. Did the Russians or A-H ever seek open battles with the bulk of their fleet IOTL? Jutland was an attempted to destroy a portion of the British fleet believed to be near Norway. There was another attempt by the Germans to destroy part of the British Navy by a raid in 1914 or 1915. And then the final mutiny of the German Fleet at the end of the war where the fleet refused to leave port. The Italians having a strong bias to stay in port is where I would start writing my ATL from.
As to Corsica or Tunisia, sure, they might try something. I also would not rule out operations near Egypt. There are two conditions that are likely to prevent this, IMO. One is that the bulk of the Italian army will find a way to fight the French in Europe or be busy garrisoning cities versus potential British attacks. Besides the troops fighting France, the Italians will likely have to garrison with at least a corp or maybe an army Rome, Naples, Sicily, etc. Second, I expect the French/British will keep at least naval parity with the Italians/A-H in the Med. The UK just has so many older ships. But given a situation where the Italians believe they can achieve local naval superiority and there are adequate land units available, sure, and aggressive Italian commander might try to take Corsica. Or keep the sea lanes open to North Africa for conquest. Or even something more daring. It is just a not a likely event.
As to decisive battle, everyone wanted a decisive battle, but only where the odds greatly favored their side. And when the odds greatly favor one side, the other does not leave port, normally. Forcing decisive battles at great advantage to your side is difficult to achieve.