That's very true, I was just pointing out what prevented any other outcome than what happened in OTL.
It wasn't so much Germany as a country, but Hitler himself that considered it a foregone conclusion, given the talk Mussolini talked. Since the two were allies at the time, the Fuhrer would have very likely considered Italy adopting a policy of full neutrality during the war a betrayal and a surrender rolled into one.
Also true, I wasn't saying that something along those lines would happen with any degree of probability, at least as long as Germany had other cats to skin.
Could that play into Italy favor if Hitler invades Italy later into the war and right before the USSR and allies start pushing from both sides? Hitler racist views and increasing insanity makes him think Italy will be a easy and quick conquest but the Germans are over stretched and already fighting the war on multiple fronts. Mussolini and most Italians get really pissed at Hitler and the Nazis by what they consider a betrayal and unjustified aggression by a nation that was supposed to be at least cordial with them. Mussolini and the fascist now rally the Italian population who are much more committed to the war due to the nature of how they entered it and are better prepared for it. Italy due to having at least until 42 to build up its military and make it competent is able to stop the German invasion. The deepest the Germans push is maybe the outreaches of Venice before being pushed back. The Italians are actually now able to push into Austria and maybe south Germany before much of the allies or USSR can. This isn’t due to Italy being a top tier or great military power but more due to the fact the southern front is the least defended since more troops are either in Eastern Europe or France.
Maybe Italy is also much more willing to work with right wing opponents of Hitler and be more lenient with the Germans then the other powers. A lot of the Wehrmacht and old guard will probably be upset with Hitler invading a fascist nation they are trading with especially with the war becoming increasingly hopeless for them. This leads to massive surrender of German troops to invading Italian forces who probably prefer surrendering to them over the USSR or even the allies. Basically, Mussolini orders SS and Nazis elites to be executed but the Wehrmacht and Prussian Junker types are given very lenient treatment especially when Italy depicts them as men “just following orders” and puts all war crime blames on the SS and Nazis elites. German generals and scientist can easily be recruited by Italy. The Wehrmacht and people like Rommel are fascist but they are fascist more like the Italians or traditional fascist then the Nazis. Rommel and Wehrmacht want a Greater Reich and have no problem with killing opponents but they aren’t the extreme racial purist like Himmler and the SS. Mussolini would target the old guard and fascist who oppose Nazism for support. People who are strict on Aryan blood(Italian fascism values culture over blood especially among Europeans and hated how they looked down at the non-Germanic Italians) and Neo-Pagans(often extreme racial purist too who looked down at Mediterraneans) are probably purged by the Italians with the help of local fascist support. Those two groups were usually the most extremist Nazis. This could help Italian advancement through the Reich go much faster especially if the Italians are willing to immediately rearm the Wehrmacht and create a fascist puppet in South Germany/Austria from the get go that is dominated by the Wehrmacht and a good mix of the old guard and Junkers fleeing from the east. If Italy is giving Germans food, shelter, and working with them when the allies and USSR are not they are going to have a much more welcoming and easier time in Germany. Imagine the possible responses Italy could get from German citizens if they do this while the allies do pillow bombing and USSR is doing what it did. Unless Italy faces heavy German occupation they are likely to be more lenient and cooperative with Germans especially with the fascist and right wing. Italy could have the Wehrmacht have mock trials for Nazis elites and SS before quickly executing them. That would be a useful propaganda tool for Italy.
Furthermore, Hitler invasion of Italy would likely turn many fascist leaning nations against the Nazis even if they don’t officially join the war. Spain probably supports Italy indirectly at first and maybe jumps in completely once German defeat looks certain. How is neutral fascist nations like Spain supposed to take a invasion of Italy by Germany? Germany would have invaded a fellow fascist nations, technically the original fascist, who worked with Germany in the past and who was currently trading with them because Italy didn’t follow Hitler’s demands to the word. This could create a situation where fascism and Nazism start looking at each other as different groups. Nazism start depicting themselves as a completely separate and unique German ideology while depicting fascist as a “reactionary and devious mix race people”. Italy could turn Spain and Romania away from the German side towards theirs if planned well enough especially if butterflies makes Romania neutral before Italy enters the war. Invading Italy would likely turn Nazis remaining leaning and sympathetic nations against them. You can only go after so many people before everyone starts looking at you as a straight up bully. Could some of these points play out or work?