Could you explain the fatal flaw in the position and what your two options would do to resolve it?
It's an interesting variant, with excellent potential, but it will need some balancing. I love the colonies in Algiers and Nicosia. Switzerland should be very interesting.
I'm concerned with Norway-Sweden because they seem vastly underpowered. I could only see their success if the player in charge of them was vastly diplomatically superior than it's surrounding players. It has no guaranteed builds, England can force Iceland, Germany can force Denmark. England can quite possibly put a lot of strain on Oslo early on, and a tiny concerted effort between Russia and Germany could do the same on Stockholm.
I really think Spain should start out with Portugal... or perhaps you have another way of balancing it. France's army in Marseilles can wreak psychological havoc on Spain, forcing it into a gambling position for a build. It has to 50-50 gamble whether or not to move to WMed and Aragon to bounce France's double threat and possibly give up Portugal, or forego the bounce for a possible fall 50-50 on it's home centers.
Also, Austria-Hungary doesn't have too many initial expansion points, all of which can be taken quicker by other nations, and early attacks on other nations look quite easy to rebuff.
Overall, I think the oceans will get too crowded and the game will be limited by naval stalemates. Out of the thirty odd territories added, only two were ocean territories? I estimated the net change in coastal territories to around 12, but many of them were in relatively useless coast in terms of facilitating fleet movement, such as Georgia, Jauntland, Lapland, Palestine, Nicosia, Ireland, and Ulster. MAO looks really easy to hold from the north, and SoG really easy to hold from the south.
Also is Sicily a territory that can be occupied? Because it's named on the map, but not listed in your territories added list.
Of course, my criticisms are purely theory-crafting, and perhaps in practice some of them are quite negligible.