It seems like yet another futile reach for a war-winning strategy for the Axis. OTL the Allies were indeed caught nearly flat-footed (except for the fact that Britain and USA both stuck to maintaining gigantic navies in the interwar years, Depression be damned--the navies went on short rations early in the '30s, but they were not pared back; Britain absolutely leaned on having the greatest navy in the world for her identity, and the USA had long desired to match it and could afford to. But across the board, as a general thing, the Western powers responded to the Depression, and the European Entente powers before that to the general debt and devastation of the Great War, with very desultory military development. As I understand it, official British policy was "no major war for the next ten years" and they kept moving the base date for that decade countdown forward all through the '20s and into the '30s.
It has been argued by others here that if the Germans will not play along and placate the British by adopting the treaty that as noted diverts German naval efforts in the direction the RN thinks it can win against, the Admiralty will be scared and lean on the Government to do whatever it takes to authorize a buildup. You say, nah, they don't have the money and the Dominions want out. Well, gosh, the worst case is that the Government says no to the Admiralty and leaves RAF and Army on short rations too--just as OTL.
And then Hitler starts his war, after the British and French buy themselves a year of frantic preparations in the wake of the Czechoslovakia crisis--and the Rhineland crisis was hardly the last moment that British factions who were complacent OTL could tip the balance for effective action against the Reich; I do think as late as 1938, the "Entente" of Britain and France could break Hitler. Not easily, perhaps. But Czech forces alone would be a major road block for the still fledgling and green Wehrmacht, whose equipment was far more primitive in summer '38 than it was a year later, whose trained recruits were far fewer, which had only the war experience, in recent years, of the Spanish Civil War which I would have to look up, but was I think still ongoing during the Czech crisis (though I suppose by then the Republicans were on the ropes). OTL the Germans sent over to aid Franco had plenty of time to return home and assist in training up new recruits, with a war over Czechoslovakia instead, they haven't had this time. Meanwhile the French and British forces include men who have had recent fighting experience, not just in the SCW (French, not so many British) but mainly in their colonies, suppressing this that and the other rebellion. As for the Czechs, they are fighting for their lives, with a considerable munitions industry and quite a substantial trained force with pretty modern kit. This is without bringing the USSR into it, which is admittedly very hard to do anyway--the Soviets could at least make a token attempt to challenge the Kriegsmarine on the Baltic; fighting alone they cannot hope for much glory that way, but the RN can pin down the Germans on the North Sea and perhaps come in through the Danish/Swedish straits; I believe that the Danes allowing this is not even a violation of their neutrality, since Denmark had been strongarmed ages before into saying the straits were international waters in fact.
I wouldn't look to the Soviets actually being able to do anything nor to a Baltic campaign actually. It isn't necessary either. France had a huge military machine. In 1938, it would have taken time to get it mobilized, and they might have been much discomfited at how effective German weaponry and doctrine, considerably modernized, might have been against their more backward forces--but those forces were massive, and in their numbers they could hold long enough to do some modernization of their own on the fly.
You think these German naval raider groups could win the Battle of the Atlantic? I can't comment on that, much, except to say that if you could make the case for 2 or three hundred of these raider groups, or even two or three dozen, I might have my doubts about the RN managing alone against them...but you say "2 or 3!" With numbers like that--perhaps if these groups are even feasible, they can do some damage to British commerce, but they cannot stop it, and the RN is focusing all its force on sweeping them from the seas. France has not fallen, German access to the open sea is very limited, to stop the RN from coming into the Baltic Hitler must divert force to conquering Denmark--if Germans control the shores they can interdict the RN from coming in, but they have to either get Denmark to join them as allies, or conquer the place. No doubt even in 1938 the Reich can conquer Denmark...
But you mentioned part of Wegener's "thesis" was that Norway was key to success too. But what the heck does that mean? Did Wegener think Norway, as a nation, would voluntarily ally with Germany under any rule whatsoever, or is he merely saying that Germany should conquer Norway and as OTL, use it as a base to strike at British shipping from?
If the Norwegians could be imagined by anyone smoking enough dope to consider allying with Germany freely--why? For Teh Evul Lulz?--a German invasion of Denmark would be precisely the thing to put the kibosh on that and turn Norway to British alliance immediately.
If no one messes with Danish appearance of neutrality and sends no ships through the Danish straits, all German ability to project your sea task forces against the RN funnel through German North Sea ports and the Kiel Canal. The RN just sits, cat to German mouse, in concentrated force there and mauls these units as they try to sally out, then converges to tightly blockade the German accesses to the Atlantic. Meanwhile French and British expeditionary forces muster on the Franco-German border and after a half year or full year of dithering, invade.
Have the Germans conquered Czechoslovakia in the meantime? Probably, if the Czechs can get no relief from either the Soviets or the Entente, I suppose after such a long siege they will have fallen, and Germany gets the benefit of Czech assets--sort of. Unlike OTL, where they captured the lot of them wholesale and had a year to integrate them into their forces and incorporate Czech arms works into the Reich's plans, here, they'd be fighting their way in against considerable resistance that will use up all the Czech assets and wreck the factories, and they won't be in working order for months or longer, while the Entente forces finally muster up to invade in the west at long last.
And then it is game over for the Reich.
Now all that is perhaps wishful thinking, that the Allies would go to the mat for Czechoslovakia when there is no way to actually save that nation from being crushed--eventually. But they did for Poland OTL a year later.
If the Entente had moved on Hitler back during the Rhineland crisis, it would be even easier. You say "the Commonwealth won't help," and maybe not, though OTL the entire Commonwealth did rally to Britain in 1939. But during the Rhineland crisis, the Germans have essentially nothing. France alone can manage quite handily to defeat the pathetic German forces.
The problem for the Entente then would be like the real problem with invading Iraq for Bush Jr in 2003; it is easy to defeat the ostensible army of the state foe and put up a big Mission Accomplished banner. What is hard is then ruling the conquered territory! Germany fell to Hitler because Germany's ruling classes did not see any other way to keep order that would seem safe for them. Defeating the ostensible army does little to change the basic dilemmas of German governance. Now it should have been possible for an invading French force to call upon the League of Nations to legitimize the invasion as a vital police action, with Germany in blatant violation of treaty rules and the League's principles as well. And indeed among the Germans, it should be possible to find lots of people who can be associated with post-Nazi rule, starting with freeing a bunch of people from concentration camps. (Hitler might order them all killed perhaps. But that would further enrage their friends, kin and political comrades, so that might backfire even worse on the Nazis).
So indeed there were reasons the French, and British, quailed at stopping Hitler when it was relatively doable, in the earlier '30s.
But you are dismissing the idea that an Admiralty that fears German naval plans can persuade a mid-30s British government to back and encourage the French to invade, and take on the task of ousting the Nazis and putting in a German government that will back off from threatening the European order. The thing is, in the mid '30s they don't need all the assets you are saying they will not have, to defeat the fledgeling German forces in detail.
But say you are right, and the Admiralty is ignored on the grounds of austerity and lack of will.
That's OTL!
And the Allies won anyway. The Big Three that dominated the war's end, USA, USSR, and UK, all had strategic depth and logistic deep pockets.
You aren't going to enable Hitler to win with some wunderwaffen, or a clever plan to sink more commerce ships. UK, USSR and USA, once brought into the war, are in it for the long haul, and they can endure longer and build to counter any deficiencies in their arsenal coming into the war, and win it in the long run.