I like the idea of the blocs. I would just as soon lump Sweden and Switzerland into the Europe-Africa bloc to keep things clean and semi-plausible. That would be the simple recommendation. However…
Since Sweden was kind of an interesting case, you could consider making them the “if certain conditions are met…” country for the Allies as an answer to the proposals for Spain to become a pro-Axis neutral if certain conditions are met. According to my very cursory online research, Sweden was apparently drafting plans in 1943 to join the Allies for liberating Denmark. This even with the Axis still historically in control of Norway and Finland. Perhaps if the following conditions are met:
-UK is not Axis occupied
-Norway and Finland are Allied controlled
?-US has at least one ground unit in mainland Europe.
I think changing values of units would add fun and accuracy to without adding new rules to remember. After all, the OOB setup is already mangled anyway, what’s the trouble in adding a few extra lines to the initial setup for some of the neutrals?
These would be my modifications:
Mongolia: reduce to 2-3 INF total. The Mongolian army was only ~80,000 personnel in 1945. I don’t know the country’s total population in 1940 but the almighty wikipedia says < 1 mil in 1939. As it stands now, they have 3x the military of Switzerland, a nation with far more people and more organized conscription. Even with the scale of historical divisions to A&A pieces being smaller on the Pacific board than Europe, Mongolia is way too large of a force. Historically they were pretty insignificant in WWII.
Argentina: add a cruiser (sz 85)
Spain: add a tac bomber
Sweden: add a cruiser (sz 114), add a tac bomber, maybe replace an INF with an ARTY