I have tried the strict neutral crush a couple of times when I played Germany. I made sure I was in position to take Spain, Sweeden and Turkey all at once.
In one game, it worked really well; German and Italian troops went through Turkey to threaten the Middle East and create a southern front against Russia. Stalingrad was taken much quicker. Spain made Gibraltar much easier to defend. Sweeden didn’t have much of an impact except to get those extra 3 IPCs and solidify the German Scandanavian NO.
In the other game, it turned out to be a disaster. Fighting those three countries’ armies took too many units and cost too many casualties. Defenses ended up too week on Spain and Gibraltar so USA took both and simply absorbed Portugal. My north force was weak and failed to take Karelia. Then the Russians rolled through Scandanavia. Turkey put up such a fight, plus I didn’t commit enough forces, that Germany didn’t take Turkey but Italy did. Therefore, Italy had some fun rampaging through the Middle East but it messed up Germany’s attack on Russia in the south.
So, I guess the point is, sometimes it works and sometimes it doesn’t. In later games, both Axis and Allies pretty much leave strict neutrals alone.
One thing, have you thought of trying “neutral blocks”? It’s a house rule we have adopted where the neutrals are sectioned into geographical blocks; European neutrals, Middle East neutrals, African neutrals, South American neutrals and Mongolian neutrals. So, if you attack a strict neutral, ONLY the neutrals in that block change to pro-other side. The thinking is why would Mongolia or Argentina care if Sweeden was attacked? Just an idea. Even using neutral blocks, our players tend not to attack strict neutrals anyway.