I have heard that argument before all it falls apart quickly. What is so special about the Czechs that makes them deserving of a rump state when the Slovaks get no say under Hungerian rule?
Because under Hungarian rule the Slovaks had no real national identity. The Czechs, meanwhile, had their own political parties, regional parliaments (when they weren't shut down), language schools and military units. There was already a "Czech Nation" in all but name prior to the collapse of A-H. Hungarian restrictions prevented the Slovakians from really asserting their own identity until independence - which, by no coincidence, they achieved in union with the Czechs.
What will the Germans do when the Czechs assert their sovereignty and start nationalizing German businesses and launching terrorist attacks, because they will. They are going to send a army in, that what, and we will need a new definition for sovereignty. Who is going to stand up for the sovereignty of a small state surrounded by enemies? If the Germans cared about soft power they would not have annexed the German regions and make the same mistake Austria-Hungary did when they annexed Bosnia. A "soft power" solution would have no annexations, the Germans and Czechs live together with German "peacekeeping."
The soft power solution would be the better choice by far. All depends on the course of the war and how far Germany has had to go to win to know what kind of Germany rules after. The Kaiserreich is not the Third Reich, remember.
But we are past the point of no return now so the Germans might as well treat the Czechs like the Russians treated Poland.
How are we past the point of no return? Are you working from a different TL, because the OP hasn't determined the course of the War that results in German victory.
"If you behave you can have autonomy, but under OUR sovereignty." There are times for using soft power and hard power, and a rump Czechia is not a case of soft power because it is not a viable state unless we bring suzerainty back Big Time.
Maybe the Czech Crownland under a German Prince instead? Suzerainty would still be possible post-WWI, even an alt-WWI. OTL, the British Empire interwar was pretty big on suzerainty one could say.