Right now I am leaning towards Chris' (CWIF's) solution to the various units with dual affiliations:
1 - Captured units are repainted to match the new owner.
2 - Permantently acquired units are repainted to match the new owner (e.g., Netherlands naval units, Norwegian transport, Bearn).
Well, you need to be carefull here in my opinion, because there are 2 kinds of "Permantently acquired units".
Netherlands naval units stay Dutch units after the Netherlands and or the NEI fall, because the Netherlands are only
incompletely conquered. So those units do not cooperate with other minors aligned to the CW, as the Danish (who also are incompletely conquered) for example. The Yugoslavian ships on the other hand become CW units after the fall of Yugoslavia, because Yugoslavia is
completely conquered. So the ex-yugoslav ships cooperate with all the others ships from minors aligned to the CW.
So I think that you should use two rules :
2a - Permantently acquired units and naval units from completely conquered aligned countries are repainted to match the new owner (e.g., Yugoslavian & Polish naval units, Bearn).
2b - Permantently acquired units from incompletely conquered aligned countries stay as they are (e.g., Dutch & Danish naval units).
This should be to help the player understand why the Danish & the Dutch ship are refusing to dock at the same port for example (not cooperating has lots of bad sides thatt the player will be aware of from the rule book).
3 - Lend leased units get a horizontal middle stripe the color of the country from whence they came (since they are mostly owned by the controlling player, there is less of the original owning country's color).
4 - Loaned units get a horizontal bottom stripe for color of the borrowing player (mostly owned by the original player, so there is more of that color).
5 - Units from aligned minor countries are recolored to match the controlling major power. Some notable exceptions are Poland, Spain, and Turkey which are left as is. This decision primarily affects units from the Balkans, southern Asia, and South America.
Here I'll have the same reserve as for 2.
Units from aligned minor countries do not cooperate with each others. Mexicans & Brazilians for example do not cooperate when both are aligned by the USA, and do not cooperate with the CW units, so both cannot end a move in the same hex for example, they cannot enter a CW home country, cannot stack with a CW unit, so if you change their color to the US color you will end with a 6-5 US MOT (Brazilian in fact) that cannot stack with a British unit in Malta and will wonder why.
I think that Minor country units should stay their color.
Cheers !
Patrice