1. The German army 1920/35 was not a small army. It was a professional core designed from the onset to expand into a large world beating army. Everybody was trained, and trained very well, to assume responsibilities two ranks above. The one thing that takes time to increase an army's size is trainning officers and NCOs. The Germans had basically an whole army of potencial high quality officers and NCOs. You need a good trainning school and a few years to have a good infantry Sargent. To have a rifle squad you need that Sargent, ten healthy volunteers and two months. The Italians were unaware of this, since it was a new untried concept. They would assume a walk, and in fact only get involved because of that, go in with a few divisions, and make a mess of it. They had a perfect record of making a mess of every thing in the 30s. Ethiopia was a mess. Their Spain intervention was a mess. Greece was a mess. Albania was a mess. Lybia was a mess. Fascism was a corrupting influence on Italian society and on the Italian Amy. By the 30s it had ruined it.
By 36 the Germans would, in this set up, win easily. In 1934 they would send five divisions to fight a delaying action, leave the rest of the army home to accelerate trainning of volunteers, prevent an Italian victory in 34, wich essentially means keeping them mostly out of Germany, and come back in 1935 to send them back.
The He51 was actually in production in 1934 and German factories were ready to convert to military production, having built for export and for alleged civilian uses. The clandestine Luftwaffe was a few uniforms and black crosses away from being an airforce. Sure, Fiat was transitioning from the CR20 to the CR32 wich was better than the He51, but the 500/1 air superiority some are assuming would not exist nor last.
And this would be an unpopular war of aggression (in this setup) in Italy and a people's war for the Germans and Austrians. Nobody would be talking about an Austro German integration during it, wich would make support for Italy difficult.
One of the assumption the Italian high command made in Plan 34 was that there was a great risk that any agressive move by Italy in Europe would trigger a two front war with France and Yuguslavia.
Enigmajones said fighting Germany is different from fighting Ethyopia. Of course it is. Unless we're talking about a challenge for a 10000m Olympic race, fighting Germany is a lot harder than fighting Ethyopia.