Honestly keep it pretty much as is, there's a lot of myth about how unfair ToV was, but in actual fact it was pretty standard to seek reparations and territory (and base you troops on their land while it was happening).
Prussia forced reparations on France in 1871, in the Treaty of Frankfurt. Those reparations were calculated on the same basis as the reparations Napoleon had set on Prussia in 1807 (Bismark, eh), it also involved the Prussian army standing around paris while it happened
"It was generally assumed at the time that the indemnity would cripple France for thirty or fifty years"
The prussian attitude at the time, The Prussian Finance Minister
Otto von Camphausen:
The German nation had after all suffered so many additional losses in blood and material goods which are beyond all accounting that it is entirely justified to assess the price of the war generously and in addition to the estimated sum to demand an appropriate surcharge for the incalculable damages.[2]
and Bismark himself:
"France being the richest country in Europe, nothing could keep her quiet but effectually to empty her pockets".[3]
Speaking of which the
Treaty of Paris in 1815 levied plenty of reparations against France, including loss of territory, and paying for their neighbour's fortifications and billeting of their troops on French territory. But you know it look a long time, resources and blood to beat napoleon (huh sounds a bit familiar that)
So in type and in scale ToV is actually about right (in fact given those figure by today's standards the cash reparation in ToV compared to ToF 1871 are quite low especially when you compare the damages in each war
Honestly The ToV was cruel and unusual is as much a myth as the stabbed in the back myth. Especially as Germany managed to avoid getting counter invaded and have say Berlin besieged etc, etc. Ironic give the lack of this happening fueled the stabbed in the back myth.
So Ok what would I do differently, for me the it's the depression that cause the issues and IMO gives power to the myths. So if I'm going to use hindsight I'm going to concentrate there. Hower that involves forseeing the hit and changing international financial systems and attitudes at the time before it hits!
Breaking up Germany is a bit of a non starter. Just as Bismark realised he needed the German states to want to unify in order to get them to. The corollary is the only way to get them to spilt (and stay split) is for them to want to, and why would they? So breaking up Germany would involve permanent garrisoning and constant low level fighting.
Give A-L to Germany in internationally recognized treaty, lay war guilt at the foot of the Serbian, the Russian Empire (now defunct, Soviet Union is found blameless), and France.
Germany pays indemnity to Belgium, France pays indemnity to AH in lieu of her ally the Russian Empire, GB pays indemnity to Germany for the blockade.
Italy loses some minor territory to AH for the back stab, and funds them a new Dreadnought.
Germany keeps her fleets, everyone is bound by LNT, save for the British getting a mere 25% tonnage superiority.
Basically treat everyone as adults, but slap any French representative demanding revenge, and tell them not to fuck up and help start wars next time.
So treat everyone as adults
Except France who had 20% of it terrority trashed having been invaded, lost over a million men, was our ally and we fought with shoulder to shoulder for 4 years?
Or GB pays who pays reparations to Germany over blockade, but we're fine with unrestricted sub warfare!? Oh and you going to proportionally reduce the RN!
Or italy again an ally we fought with for 3 years, they're going to be net losers of territory
War guilt goes to France and Russia but not Germany who gave A-H a blank cheque, and invaded Belgium and France. Or A-H who kicked this off clearly looking for war with Serbia?
Oh and AL goes to the loser in perpetuity.
Yeah this is not only never going to happen but would be grossly unfair to the entente even forgetting they won and
Germany sued for peace.
But yes given you started with the bit in bold, I suggest we have very different ideas about all this!