Awesome! ^_^snip
I think Italy works best as a member of the French alliance in my scenario.Well in a Nazi-like Frace scenario, Italy position is probably at her opposite side.
Italy have eyes on lot of French possession and Yugoslavia (Benny favorite target) is a France protege (at least in OTL), so an alliance with the UK is natural as even the British will search a strong continental ally and if Germany can't really rearm Italy is the best choice; plus France as claim on part of north Italy so we know that we will be a target.
The war will be principally on air and sea as the Alps block any attempts from both sides ( or maybe the France can try to invade Switzerland...oh the fiend) except for North Africa where Anglo-italian troops will fight the Franco-Spanish for the control of the desert.
Mussolini's the opportunistic type. He'll wait to see how the cards fall after war starts over Wallonia. Germany's quick defeat will cause him to do some thinking, as will as the Fall of Gibraltar and North African campaign.
Britain can offer Italy some territories on the French border, along with French African colonies. A free hand in Yugoslavia too perhaps, although thats a rather iffy thing.
Mussolini however could see the possiblity of taking Egypt and the Sudan to link Italian Libya and Italian East Africa. France can also offer to sell Chad to Italy as an alternative to Egypt, if France has interest in Egypt besides the Canal. Chad is useless compared to the benefits having Italy on France's side.
And to sweeten the deal a three way partition of Switzerland between France, Italy and Austria could be in the cards.
Yugoslavia is a sticky point, but Mussolini was able to tolerate Yugoslavia's short membership in the axis OTL, so he should be able to deal with it here.
Works better from a story telling perspective too in my opinion. Helps balances the French and British alliances out more.