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My opponent and I are having a rather interesting go at it. Right now the Japanese have not lost any significant ships, but the U.S. is down three carriers sunk and the rest damaged. The Japanese are in conflict with Russia since they did not maintain the garrison force adequately, but with interior lines and no perceived Russian reinforcements on the intelligence screen I am not making progress there. Chinese troops are taking a pounding and have lost several cities. Even a campaign in Burma to try to draw off forces seems to be going nowhere, though India is safe at present. He has invaded Northern Australia, taking Darwin, Wyndam, Derby, and soon Broome, and has over 100K troops involved. Since Aussie bases are far apart my air is weak. An attempt to take a couple islands in the Pacific hasn't worked, and he took and built up Guadalcanal so that even a bombardment force took a big hit. Port Moresby is gone as my planes wouldn't reach to damage his ships going there after our duel in the Coral Sea (we started with the May scenario to war's end) as he simply pressed ahead with the landing ships and beat the air base into nothing. The West Coast doesn't get much help until several months from now, so his forward aggression is going quite a number where he wishes, and right now a large carrier group (pretty much all of KB) his headed toward Pearl, I presume.

Several questions (and recognizing that I erred in trying to be aggressive): As it seems he has stripped back water bases of troops, is there really any detriment to his strategy? Does supply for the Japanese really become a problem, particularly with production? Is there an acceleration of troops, for example, raising additional units in Australia, because of invasion? His planes outrange mine and seem much more effective in strikes, even against airfields. Is there some advice on settings to either get in close or run away? There is an oddity about replacements, especially affecting the Chinese units. Is the proper setting as shown on the Combat Unit Screen in the lower left, to receive replacements that the reading should say "no replacements"? On the screen for LCU's where there are multiple units listed, at the lower left the push on the "allow replacements" doesn't change, and on going to a single unit the lower left will show "allow replacements". But that is the opposite, for example, of the effect of dividing or rebuilding a unit (that is, toggling to rebuild turns the phrase to "divide unit"). There seems to be very little effect from bombing ground units with B-17's or Hudson's; in fact, they seem to have little effect on anything. Is there a better use for them you have found?

As it seems he has stripped back water bases of troops, is there really any detriment to his strategy?
He will pay for it, but not until 43-44 when your forces start building, cant remember Soviet reos but they will come in large numbers (seems like your opo has looked up the numbers) Are you able to rebase some 4E from the Aleutians into Vladivostok etc, might cause some heartburn? What can you slip into Siberia, some bombers to hit Paramushiro etc, even to scare him a bit[:D]
Does supply for the Japanese really become a problem, particularly with production?Yes, but if he is capturing resource and oil he could balance it out.
Is there an acceleration of troops, for example, raising additional units in Australia, because of invasion?
?? Yes in WITPAE, cant remember for WITP. Check the rule book.
His planes outrange mine and seem much more effective in strikes, even against airfields. Is there some advice on settings to either get in close or run away.They had to do something to get JFB to play. This will change, you have to make sure your defending fighters have as much experience as you can get, dont waste pilots on poor aircraft, you are better in conceding some ground than beng on the wrong end of the attrition battle. Choose a point to fight for with the advantages in your favour and make him bleed.
There seems to be very little effect from bombing ground units with B-17's or Hudson's; in fact, they seem to have little effect on anything. Is there a better use for them you have found?
Use your Hudson on Nav Search, good range and you have a num,ber of them so you can cover a good area.
The B17E should be a competent bomber, if your pilots have their skills high enough, so work on protecting them when attacking bases. If greenhorns set them on Nav Search as well.
I dont think you will ever get enough B17 to put in even a 100 bomber strike, wait for the B24-B25 to arrive in numbers and your results might change.

Build "roadblocks in OZ at Alice Springs, Geraldton, Mt Isa, get him at the end of a long supply line and pound him, his investment into OZ hasnt provided a gold mine of resources or oil yet, look at what you can do from Burma or the North/Central Pacific to make him look over his shoulder, a push from the Aleutians threatening a junction with the Red Army might do the trick.

Its a long war, you will get your CV back and with better aircraft, your Fighters and Bombers will improve in quality and quantity, you just have to hold your breath for long enough!!!

The need to train your pilots up to decent levels is very important so that when better planes arrive life for the JFB becomes difficult at best.

Going so far forward stretches the Japanese and when he does stop to dig in there will be the inevitable weak spots.  If it is a forward based defense, like Steve used against me, once the outer shell cracks the Allies pour through like water.

Be patient and build your forces to retake Oz.  Hold Perth! 

See my AAR to see how I dealt with some of the problems that you're facing.  I only lost 1 CV though and that makes a difference.