Those are all true and fair points. But I'd say that the Japanese and Nazi fanaticisms, while they did support very similar wartime behavioral patterns, were not altogether the same and that the differences do carry with them some legitimate potential behind them when one is exploring PoDs and which direction the butterflies might point.
The Japanese army was not always the raping, looting horde that it was in 1937. And it was not out of control. As I mentioned earlier, it treated Russian and German POWs with respect and in accordance with international treaties. In the Boxer Rebellion its soldiers were instructed not to loot or rape on pain of death, a order they followed until the looting done by Western soldiers made it "acceptable". I am not yet sure, since I'm not done with the book that has told me the above, when the ultra-nationalist samurai indoctrination really started getting out of hand, but I do not think it was inevitable. In the 20s the Japanese were still making rational decisions about China. Their rule over Taiwan while not a good thing was as far as colonialism goes rather successful at making the locals feel more or less okay.
What you need the Japanese to be able to do, or have the fortune of encountering, is either keeping the KMT from successfully uniting North and South China or if the whole thing splinters by itself due to an alternate path. Instead of being a successful all-China party, have the KMT confined to the southern Guangdong region. Perhaps the ROC might exist on paper but in reality it would be a fractured state of contending warlords calling themselves political parties. A lot can be done to keep China from uniting for a long time. It is something that has happened several times historically.
All the Japanese have to do in this scenario (PoD could be in mid or late twenties) is keep and expand their concessions and economic enterprises in the 20s and 30s, exploiting the mainland indirectly. They did this in OTL as well. It was mainly the supremacy of the KMT, and then as the last straw their pact with the CCP, that led the Japanese to believe that they had to go into all-out conflict in order to maintain their position. Anyhow, if Japan stays more or less peaceful with their enterprises in China, and if China remains a political mess, it can profit.
Then we have the problem: Won't WW2 be butterflied? It might to a certain extent but by the late 1920s (assumed that is the PoD) a failure of the KMT probably isn't going to prevent a major war of some kind to erupt in Europe in the 30s or 40s. And Japan has had America in sights for some time already. Moreover, China that is neither united nor in a state of war with Japan would still be subject to competition, economic or otherwise from other powers. In order to protect its milking cow, Japan would have the same impetus it already did to keep strengthening its military force, and from here they could still easily if not inevitably come to blows with a major Western power. Then, provided they are not the aggressor, they can fight and win a limited war for an enlarged sphere of influence that gives them China and some portion of SE Asia. Since they have not felt cornered by Chinese unification, nor broken their aim to be a great power of Western standard, they may very well do a better job of not brutalizing everyone they touch, perhaps more "Taiwan" and less "Nanjing", more semicolonialism and less "three-alls". With a PoD in the 20s this shouldn't be impossible.