If Italy does not enter the war then the immediate situation is and the secondary situation.
4. Italian exports increase as Allies are fearful of Italy coming in on the the CP side results in a very porous blockade.
Hmm. If Italian neutrality is what has helped the CP thus far, I don't know that the British/French don't decide that an open, supplied Italy isn't more trouble than a hostile, isolated one. This may result in a tighter (and very easy to enforce) blockade, rather than a looser one. Italy
may go over to the CP because of it...but I think, rather, they may decide the game isn't worth the candle, and pull back to a more "neutral" neutrality, rather than a friendly one. Consider:
1) If Italy is making bank by being the supply conduit for the CP, a blockade kills that dead. No more profits, at all. And you will have a couple of former customers (with ittl large, successful armies) who were former enemies (hello, Austria!) that now have nothing to lose settling old scores.
2) Losing the trade of being the supplier of the CP from the outside world (even with the CP making battlefield gains), is going to put a blockaded Italian economy into a cocked hat. That makes a lot of Italians veeeerrryy unhappy. Oh, and now (if you decide to jump into the war) they are going to be conscripted, instead. Dunno if that is going to smooth things over much.
3) Iirc, Italy needs no small amount of imports for domestic consumption. Now, instead of being able to freely buy from around the world, they are going to be buying from people that were formerly customers. That shrinks a pie that now has to be shared among more people. Germany & A-H (especially if they are doing that much better) aren't going to put exports to Italy near the top of their priority lists.
If the Allies want to blockade Italy, I think that the country goes from "Annoyance to the Allies/Asset to the CP", to "Insignificance to the Allies/Irrelevance to the CP" (at best, it could be "Easy pickings" to the CP, if they are feeling bold enough). Now, Italy could be seen as a threat if it spends much of its time/trade profit building up its armed forces in order to become too powerful for either side to pick a fight. But who is most likely to feel threatened? In the early parts of the war, the CP. Later, if the CP does as good as you suggest (and I don't see why not), France. But, will either side let an arming Italy reach that point? (Theoretically, the Italians could try to threaten the British by building up their navy, but that is a two-edged sword, too, with the Austrians; and, the British are far less shy about forcing a decision with uppity naval powers in waters of UK interest.)
A neutral Italy that doesn't get
too helpful can, indeed, "make bank". Getting too greedy will make trouble.