If the German attacks on the USSR still happened, you'd wind up with some seriously screwy situations if Tito was able to rise into a position of power in Yugoslavia. Given the territorial problems between Italy and Yugoslavia, you might wind up with some seriously messed up alliances being formed.
Actually, my head hurts trying to figure exactly where things would have gone without an expansionist Italy. No North African front, Greece being left alone, but without those distractions, Germany may have had stronger forces in Europe itself. Italy might have been the front the Allies used to hang onto after the fall of France, but given the less than stellar state of the Italian military, how well would it have held out against a determined German assault? Would Germany have switched to attacking Italy instead of the USSR? Would Stalin have seized the opportunity to "assist" the Nazis in "liberating" the bordering countries next to Italy? Most of that would have been ground force dominant, something the UK was sorely lacking in the early war phases.
Determining when Italy dropped away from the Germanic influences would actually be a major factor in the Spanish Civil War as well. Without Italy siding with the Republicans, Franco might very well have not achieved victory. Would a communist dominated Spain may have sided with Germany in an invasion of France? Could you switch in Spain instead of Italy? Gibraltar would most likely have been taken had that been the case, but without needing to bolster the Med, would it have really been important in the long run?
Given the state of affairs in Italy at the end of WW 2, I'd suspect the anti-fascists would not look too favourably at their former leadership. The ensuing chaos and disruptions might effectively knock Italy out of the war, if you follow a Mussolini ouster around 1940.
What if wise, however, there's loads of great things, giving reliable British engines to Italy would be one right away. Italian navy units in RN markings would also be nice to see.
Alvis 3.1