A few random thoughts:
* while not inherently probable I like the obvious ore-war sides being changed, it makes the background distinctive
* stranger things happen in real life, obvious examples being a democracy fighting for the Axis in WW2 (Finland), the First Crusade reaching the Holy Land and immediately attacking their one Moslem ally and the fact that much British planning in the 1920s and 1930s was for a war with France.
* I think in the aftermath of the nuclear war, a "political" pope could care out quite a niche for himself (there are a few hints on how in the article I wrote).
* Depending on timeline, in v2.2, maybe with the left in disarray in Italy, a new charismatic leader emerges (maybe a former blacksmith who had a rivalry with the future pope...) and reunites the factions just as the coup occurs in Moscow. The now united left with (limited) external backing gains ground. Add a fractured right, perhaps because of a sex and/or corruption scandal or two, a well orchestrated left wing campaign regarding Gladio. Add in further distancing from NATO after it is found that British sophisticated bomb making equipment is in terrorist hands (stolen unashamedly from the BBC political comedy Yes Minister) and you could be left with a significantly more likely left wing government. V1.0 could be very similar, V2.0 might be more difficult.
* If we regard Italy as an ally of convenience with the Pact as has been suggested elsewhere then again plausibility increases. This would explain the lack of Yugoslavian involvement and the move north becomes more of a land grab.
* Consider that by the start of Italian involvement much of NATO's high tech stores have been used. Canon also makes it clear that the NATO response against the Italian attacks use very much the last troop reserves, moving many down from central and northern Germany. Despite the difficulty of attacking through the Alpine passes (compare WW1), I can see a quick strike against limited opposition breaking through quite quickly and only floundering as logistic difficulties (in particular as higher tech equipment is expended) run out.
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