Standing up to Japan isn’t an awful idea, but doing it that early in the game could spell disaster. A ton of his guys are parked right next to you at the start of J2 no matter what his plan is overall, and you only have 7 hits. Normally he has to chase you down over many turns and pick you off, but with your plan, you’re gathering everything up for him. With 2 SB and 1 Air Pair on land, plus a minimum of a Japanese Grand Fleet and the possibility of bringing up to 2 more air pairs, you won’t stand a chance. The stuff on Philippines can be attacked with newly built reserve stuff from SZ 6 or Japan, its not a distraction…
Like attacking Russia, this may distract Japan from whatever his original goal was, but only for a turn. And, since he’s wiped out a big portion of your air and navy in one blow if he comes big, you won’t have 1) the India turtle, you spent the $ on the base 2) the UK eastern navy, which argothair suggests as a potential way of warding off the Japanese, since you can combine everything that doesn’t die during Taranto with the BB, if it survives (now you have 1 CA 1 CV 1 DD 1BB!)
You’ll also want to block SZ 37 with a DD at the crucial moment, or put the UK DD with the Japanese fleet at peace, thus stopping their ability to load transports. both of these tricks wont work when you stand off.
Lots of good UK strategies look to the later game (and saving a bunch of assets long term) where you can use African forces and planes to make India difficult to take, or even get a whole grand fleet together that can prevent Japan from having their way in the Indian Ocean.