Hungary can still conquer all of Balkans relatively easily. Minors just can't keep up with the majors, which is acceptable in my book.
Historically, or for the sake of gameplay?
For the sake of gameplay. In vanilla HoI3, both countries had a more "historical" neutrality (of course, measuring something like that on a scale of 0-100 is pretty challenging) but that merely led into a situation where, more often than not, USA would join Allies in '39 or UK would DOW Germany in '38 or both. While this would be a nice bit of extra challenge for the player, it usually ruined the game if Germany was played by AI. Having American divisions in France in '39 or '40 usually meant that German AI couldn't conquer France and if you were playing as Hungary waiting for Barbarossa to happen, well, it would never happen. The only way they prevent that was to jack up the neutrality scores of both UK and USA to the max - other alternative was to hardcode their AI behaviour and no-one likes that.
Did you read my post? If it takes me two years to build a factory, does it make sense for me to wait there twiddling my thumbs for an hour while nothing happens between 1936 and 38? Have you played a small country?
Yes, I did. I don't understand why you complain - you chose to play a grand-strategy game and then you chose to play a South-American minor. It is entirely appropriate that you have nothing to do most of the time. If Ecuador had stuff to do all the time, it would mean that playing a major would be impossible for humans - because they have much more going on. Nevertheless, playing as Germany from '36 to '39, if you wait for historical WW2, is pretty boring as well. The focus of the game is on warfare, thus if you're not waging war, it is bit boring - just like Doom became bit boring after you killed all monsters on a level.
Then you said it'd be impossible to apply arbitrary numbers for starting threat levels, even though Paradox has already applied arbitrary numbers for starting neutrality.
Well, first I thought you just didn't know how to manage threat and neutrality. I've never played as a South-American country so I thought that the war is possible to spark off if you work on it from the beginning of the campaign. You convinced me that it isn't, at which point I remembered that there was an event for that war in HoI2 and Vaarna said that such an event chain exists for HoI3 but it has been commented out. More event is always better, which is why I said it's a shame it hasn't been implemented. Of course I dislike arbitrary numbers because I would prefer everything to be as accurately historical as possible at the start of the campaign. However, playtesting has proven that unless the neutrality of certain countries are pumped unnaturally high, bad things happen. I wouldn't be too surprised if the war event is commented out for the same reason - perhaps USA gets involved due to having a GoI over every South-American country.
If there are things I'm overlooking let me know, but based on your remarks here I'm wary of the "trust me, there's a reason for it but I can't say what it is" argument.
It's because so often people complaining about something in a complex game like HoI3 or when offering "simple" solutions, have never paused to think what sort of side-effects their suggestions could cause. Couple that with the large numbers of idiots who don't bother to read the manual or are unable to grasp the game mechanics who then whine loudly about the game, hence my frustration. I was a betatester for HoI2, so I got to see up close how difficult it is to get a feature working properly so it won't screw up one aspect of the game. Classic example is USSR - if you make AI USSR to be challenging for human Germany, you simultaneously make it impossible for AI Germany to have any chance against it, leading to a situation where AI USSR sits in Berlin by December 1941. People cry out. Make it so that AI Germany and AI USSR have a closely-run struggle that lasts for several years and human Germany reaches Moscow by December 1941. People whine.
Now I'm not trying to excuse Paradox, because I think they should drop the ability to play as any country in the world - it's been their gimmick since Day1 but it's largely a wasted feature, especially in a HoI game, since it's completely impossible to get the game working so that gameplay would be satisfactory, no matter which country play.