I have to admit, the idea does come from a game called Rise and Decline of the Third Reich which is played on a hex map. There, however, you just had to separate them from a victory city by more then two units. Otherwise, they had to have a literal chain of units running back to the VC to support them.
That’s just not possible with our map.
As for losing units to this, I don’t think you are really seeing how hard it would be to lose units due to cut supply lines. Japan basically just has to draw a line to the water ANYWHERE on the map and, as long as Japan itself isn’t completely cut off (Allies own Manchuria, Buryatia, Sea Zones 59, 49, 58, 51, 57 and 62; then none of Japan’s armies are cut off.
I guess, to alleviate your fears, we could change it so you could draw supplies from yourself or an allied capitol. But honestly, I don’t think that would come into play too much either. Since, if you can draw Japanese supplies from Germany, then you can also get them from SZ 5 or SZ 16 or SZ 35, etc since you have to be linked to German territories. That means the allies would have to take and hold 8 Territories/Sea Zones to cut you off from Japan, and that’s not going to be easy either unless Japan pulls their navy away or loses it. (And if you lost your navy, I don’t think you’re in any position to take Russia and probably have your fighters close to home so America and England cannot just encircle your capitol.)
Note, I’ve already removed the possibility of a 1 or 2 sea zone hold from killing off units on an island group. You cannot just invade SZ 47 and kill the defenders in New Guinea. You have to have physical ships in every sea zone connected to SZ 47 and not lose them to the defender in a counter attack.