The front in 1917 was far west of the post war Italian border. So 1917 doesn't suggest much of anything.
The point was not about specifically where the breakthrough happened, but the terrain it happened in with worse technology and infrastructure and large armies that had years of combat experience, making them quite different from the Italian army as of 1940.
If they declare war in Sept 1939 then it does change things - In 1940 Italy had 1.6 Million men in 59 Infantry, 6 Alpini, 3 Celere (Cavalry or Fast) divisions and 3 Armoured Divisions (granted with really really shit tanks).
And that was more than their industry could support, so most divisions were woefully underequippied, badly led, and badly trained. See Operation Compass.
Not only that though, but OP said the POD is Italy doesn't sign the Pact of Steel in May 1939, I'm assuming because Mussolini is out of power for some reason and someone like Italo Balbo is in charge and siding with the Allies after Hitler violates the Munich Agreement. Likely they mobilize quite a few less men and divisions, because no Mussolini, but that doesn't mean they are any more ready to fight in 1939-40 than IOTL. Especially because Hitler would cut Italy off from supplies of coal and steel if they don't sign the Pact of Steel, which in turn means that unless the Allies deprive themselves of those materials means Italy can't continue to prepare their military or build up border defenses. IOTL they were busy building up their defensive line against Germany in 1938-39 (and beyond actually) using German steel. So Italy is probably even less prepared than IOTL to fight, so even if declaring war in 1939 can only mobilize a fraction of the divisions they did IOTL, which though it means they are better off in terms of troops, they still have a large number of divisions in the colonies and can only deploy a fraction of what they have against Germany. I doubt they attack at all in 1939 and offer an expeditionary force to France, which may or may not be accepted. That is likely their biggest contribution and probably find their expeditionary forces overrun when France implodes.
So the scenario where Italy declares in Sept 1939 and lets say advances into Austria and makes some inroads but halts after Poland is defeated so quickly - then what?
How? The Brenner Pass was selected by Italy in 1915 as the border because it is basically impossible to attack through. Likely it could be held by 3rd line militia troops and gains would be measured in hundreds of meters. Given the previous paragraph likely they don't attack and just skirmish in 1939-40 and deploy an expeditionary force to France if it is accepted. They don't want a repeat of WW1 in the mountains.
I can see the Norway Op not going ahead as extra troops will be needed in Austria to prevent further Italian incursions.
Probably not enough to actually impact Norway though given the terrain on the border. Unless Italy plans on invading Yugoslavia they can't really afford to attack through the Brenner, their only option, and have to send troops to France to help while screening the border as they desperately try and cobble together an army that can fight a modern war. Norway was too important for the Germans not to get involved in.
The issue is what happens in France in May given the extra Allied forces and potential situation in Austria.
Maybe with Italy on side then Belgium is more likely to allow British and French troops to enter before it is too late and therefore no rush for the Dyle with their best troops and the Lowlands / France campaigns of 1940 are different and more drawn out than OTL.
No way, the Belgian issue is completely independent of anything Italy has to do with the war. If anything the extra Italian divisions and lack of need to keep French forces on the Italian border makes them more reckless in their advance into Belgium. The question is where does an Italian expeditionary force actually go in France?
As for the Allied cause even if Italy is knocked out by Germany say by 1941 - then they are still in a far better place strategically and logistically than they were OTL
Yes, especially because France is unlikely to surrender like IOTL in 1940. However if Italy is knocked out of the war in 1940-41 it is likely that the Allies suffer worse because no Barbarossa and Hitler has no choice but to go for a Mediterranean campaign of some sort; there is no way Italy could be knocked out if Barbarossa happens in 1941 and no way Barbarossa could happen if Italy is still undefeated and housing Allied (French and British) troops and aircraft.
I have driven through Italy via Switzerland (actually via Letterkenny in Co. Donegal in Rep of Ireland as you do) as far south as Naples (which for the first 24 hours I thought was in 'Beirut in the 80s' before falling in love with the place) - staggeringly beautiful country, but very hard to attack what with multiple natural defence features.
So how do you expect them to make any progress through the Brenner Pass?
And if British Commonwealth and Free French forces arrive to help????
Then Italy falling to invasion is a LOT tougher and probably because a meat grinder like IOTL for both sides, while preventing the Germans from being able to launch Barbarossa. That in turn makes the Allies lives vastly more difficult, because without 80% of the German army being occupied in Russia (and ground down there) from 1941-42 and a somewhat lesser number from then on, the Allies have to pay the blood price to face the full weight of Germany. If France is occupied then Italy is the main front and facing the near full weight of the Luftwaffe, which even with Allied help is still going to be enormously damaging to Italy.
Also with Italy in the war on the Allied side and France not surrendering, but fighting on from Italy/her colonies then Cash and Carry is in place because the French have gold to pay for things still, billions of dollars in 1940 value ($3 billion of just French gold not counting Polish, Belgian, South African, etc. gold), which puts a pretty heavy strain on them, as they are depleting their national treasuries and not getting everything for free and carried by US shipping. Plus without Barbarossa the Soviets are having their communist proxies in the US pushing against intervention still (IOTL they were until 1941 when the invasion happened and then they added their political weight to intervention at a crucial time that allow FDR to intervene more heavily in the Atlantic and expand LL) as well as supplying the Germans instead of draining enormous resources from them in combat.
Yes the Allies are saving a ton, as you rightly point out, in the Mediterranean and North Africa, but so in Germany, potentially a LOT more without having to supply Italy, fight the USSR, help Italy in North Africa and the Balkans, etc. On the balance in the near term, excluding Barbarossa, the Allies have more resources to keep going even if France is conquered, because with Italy in the fighting in France would drag out and they'd be able to keep going and evacuate more of their equipment, people, and industry to Italy and Algeria, plus Corsica, while Britain doesn't have to face the BoB or Blitz, while Germany still has to invade Italy and potentially also Yugoslavia and doesn't have Vichy to help them administer/loot occupied France.
Basically things get extremely interesting in the long run since this makes Barbarossa impossible and the Mediterranean campaign a must, so we get into what Stalin does long term, what happens with Italy and the German potential to actually successfully invade with Italy, though weak, propped up, reinforced, and financed by the Brits and French, but probably being strategically and operationally bombed by the Luftwaffe without a radar early warning system for a while.
I wish there was a good war game model to handle this scenario, because it would be extremely interesting to play out.