So, simply because a WW2 game I'm playing has had it happen, I'm kind of curious, what kind of PODs would be needed for Italy to invade Yugoslavia, rather than Greece, at first? The closest reasoning I can get ingame, as it's only tactical, seems to be a more successful campaign in the Alps, and thus a more 'confident' mainland army, but I'm curious if there's anything beyond that? Any kind of specific claims Italy had, or such?
This reminds me of how much I need to go back and read up on diplomacy during this period. Reminds me of how much I've forgotten. But to answer your question, the Italians did have claims on Yugoslav territory, particularly on much of Dalmatia. Whilst this is one of the more valuable areas of Yugoslavia, it's long and narrow, and thus difficult to defend, which suggests that you'd have to have Yugoslavia partitioned. The Ustase was originally in exile in Italy. Whilst they became dominated by the Germans (largely to minimise the ability of the Italians to press their claims), without the Germans in the ring they would be forced to go along with Italy's demands.
The only feasible way I can see this outcome is if Mussolini was successful in aligning with Britain and France to contain Hitler and prevent the Anschluss with Austria. Whilst Germany had very strong economic ties with the Balkan states, without Austria they wouldn't be able to project military power in any meaningful way.
The Italians could well ally with Hungary, whose primary foreign policy objective was revision of the Treaty of Trianon and the Disestablishment of the Little Entente (Yugoslavia, Czechoslovakia and Romania). In a situation where the Anschluss is aborted, if the Nazis decide to move for Sudetenland and control of Bohemia-Moravia, rather than having Josef Tiso take over in Slovakia, the Germans will probably look for Hungarian support in the partition of Czechoslovakia. Hungary would also seek the return of Vojvodina. An Italian-aligned Austria might be interested in reannexing Slovenia, whilst Romania would seek Banat and Bulgaria Macedonia. Croatia and Bosnia could go under the Ustase, whilst Montenegro, Kosovo and Dalmatia are Italian. Serbia would likely be a rump puppet state. With as many regional powers supporting the move, I can see the international community just having to deal with it, especially with Britain and France's desire to retain Italian support against German expansionism.