Of course it can. It makes no difference that originally it was a neutral territory. Its current status is a territory of the United States and therefore, with an IPC value of two,it can be a location where a minor industrial complex can be placed.
What the UK does is based on what they have left. Their fleet in the Med should run and hide if Germany kills the RN in the channel. Then they should build up to defend England and screw africa. Honestly the UK only cares about africa AFTER England is safe. Otherwise taking africa falls to the USA player.
The original Rules Clarifications (copyright 1991 Milton Bradley Company. All Rights Reserves. 4423-X10):
Topic: Miscellaneous
If a country’s I.P.C value goes over 45, place two markers on the board. For exampla, if your I.P.C. value is 48, place one marker at 45 and the other marker at 3.
What happens if there is a “wipeout” in the battle and all units eliminated?
The same thing, except there will be no units for the allied power to claim. You could always place an upside down control marker to indicate the territory’s status.