ORIGINAL: Klydon
I think most players continue to forget what a Axis "win" is. It is not defeating and occupying Russia, yet this is what most German players want to have not just a chance at, but a good chance at. People can argue all day long at how much of a chance the Germans actually had because there are key pieces of opinion that we just don't know about. (Case in point: the view on what would have happen if the Germans had captured either Leningrad and/or Moscow; what would have been the effect on the Russians?). The Germans finishing the game in better than historical position and "winning" has no appeal at all to most German players unfortunately.
I think for some players you are absolutely right; beating the historical axis performance and, say, holding Berlin and Praugue into 1945 will be a "victory" and an enjoyable game.
The WITP experience though seems to indicate that, for most players, grinding out a slow defeat isn't a lot of fun. In most WITP games the "fun" goes out of the game about the time the allies take control and start grinding into Japanaese territory. As long as the Japanese are still expanding or have a viable change to stop any allied offensive, the game remains fun for both players. Once the allies break the IJN though, the game generally ends; very few AARs actually play to the invasion of Japan.
The solution in WITP (and I think its a good one) was to produce a deliberately ahistorical scenario (Scenario 2) that extended the "interesting" part of the game by giving Japan more toys in the mid-late game. Based on my highly non scientific sampling of AARs, this became by far the most popular PBEM scenario. I'm not claiming that Scenario 2 is historically accurate, merely that the evidence suggests its more fun.
Based on that, I think a WITE scenario 2 in which the axis have a decent shot at auto victory in 1941 or 1942 would be more *fun* than a historically accurate scenario in which case the axis are really doomed to do nothing but play attritional defense from 1942 on.