Great job -- I look forward to trying this!
Regarding Switzerland, why not do what was done in the old Avalon Hill boardgame: just make Switzerland impassable mountains? Then you don't have to worry about how to stop the AI from invading it.
Other things I remember from that game, some mentioned above: Spain and Turkey were the key neutrals in terms of size/economy/military. Lumping Latvia/Lithuania/Estonia together makes sense, adding them to Poland does not make sense as their fates were somewhat separate. Lumping Norway with Denmark and/or Sweden isn't historically or strategically accurate. Same for combining anyone with Finland, they had their own unique situation. Lumping Hungary/Rumania/Bulgaria together DOES make a certain amount of sense, I think they all effectively joined the axis as one, they are small, border each other, etc. Greece and Yugoslavia are separate/important. Belgium/Netherlands/Luxemborg because of their size/border makes sense to combine them into one civ.
Depending upon when the scenario starts, Germany absorbed Austria and Czechoslovakia so they need not be separate states. Italy was able to put troops in Albania so that could also be part of Italy to reduce the number of civs.
England was dependent upon its overseas colonies for trade, which is what the uboat menace disrupted, so that would be an important dynamic to include, even if it requires making a 'British colony' civ somewhere to allow the trade and give targets for the uboats.