rtrapasso:
Well, since the Japanese DID attempt subversion (and did raise at least Brigade sized units) as well as direct conquest (which failed over the border at the Battle of Kohima ("Stalingrad of the East")... i'd hardly think the historical position could be called "hands off"... and notice that the Japanese IRL took at least 2 of the proposed paths.
Let's take the conquest question first. Kohima and Imphal took place in 1944 when the outcome of the war was pretty well decided. The "realist" or least implausible window for an invasion is 1942 after securing the SRA and a reasonable perimeter in the south and east. The historical offensives were only the shadow of what might have been if the grand strategy of the Empire had been directed at taking India.
The "Hand-off" option did explicitly call for adding the Indian National Army to the Japanese OOB. The combat power of the historical INA would be pretty small since most of the regiments only had small arms and machine guns, but some mortars were also available. The other point here is the there was considerable political in-fighting so the first INA was raised in late 1942, was caught up in politics, and only really got armed and deployed in 1943 after the Japanese replaced the senior leadership.
What I had in mind for the subversion leg was more along the line of running guns into India via submarines, parachuting agents into the hinterlands to organize cells of resistance fighters, money drops via Swiss bank accounts to nationalist leaders to provide "walking around" money: active measures in India to stir things up. The coding bit that would be tricky creating a battalion size unit of rebels (infantry with small arms) that would randomly appear in one of a couple hundred hexes. The Japanese could use it to occupy ungarrisoned towns, but the British would then have to deploy garrisons in the hinterlands to chase the guerrillas and delay or weaken the counter-offensive in Burma. In addition, the INA wouldn't get stiffed when it came to heavy weapons. They'd certainly have some "commissars" to make sure the guns were pointed in the right direction, but the formations would have a sizable allotment of mortars, artillery, and automatic weapons so they'd be far more effective than the historical INA formations.
The dialog box really reflects the war council that ended up giving the green light to Midway. The bigger change in the game would formalize these dialogue boxes to tackle grand strategic decisions that are not well handled by the basic game mechanics. The historical decision for Midway and Port Moresby is ok within the mechanics. However, an invasion of Australia or the move to India would like have changed things in Washington and London. Maybe, for example, the loss of Calcutta and Dacca would provoke a dialogue box on the Allied Side where the Allies could opt for historical reinforcements or take accelerated reinforcements, but suffer a several thousand victory point penalty.
I know this is all really AE discussion and the coding requirements are probably not in the scope of the scenario because this would take the game in some highly ahistorical directions if people chose radically different grand strategies.