Cephalonia and the similar events on other Italian-controlled Greek islands were a messy, nasty thing, and the Italian HQ (and the allies as well) have to share at least part of the responsibility.
The problem is that the Italian troops were under a German command, but after the armistice Italian HQ ordered them not to comply with orders from the German commands.
Thus when fighting ultimately broke out, the Italians were treated as armed mutineers (not PoWs), as they were resisting German orders. As such the officers were actually passible of death penalty and the soldiers of prisony. This was (probably) legitimate, although the debate on legitimacy of this treatment are probably moot, as there was a direct, explicit order from Berlin on that matter.
Anyway the extent to which the penalty was carried out was probably unheard-of: almost all officers of an entire division were executed. While most (all?) armies in WW1 and WW2 allowed death penalty for armed mutiny, it was most often commuted to heavy prison or forced labor sentences.
In any case, Italian and Allied HQs have some serious responsibilities in the event, as they gave orders to the Italian divisions in Greece to resist the Germans while refusing to provide any sort of supply, reinforcement, air cover, or evacuation to most of them. Basically, they left them to die - even ignoring the later executions, more than 1000 Italian soldiers died in battle at Cephalonia alone, for no strategic advantage.
See also
http://en.wikipedia.org/wiki/Massacre_of_the_Acqui_DivisionAbout the Italian defense for Rome someone mentioned, I believe it's not suited at all for a FH2 scenario, for a bunch of reasons.
A map that could be made is Monte Lungo (Dec 1943) - the first (and one of the very few) battle fought by the Italian co-belligerent (i.e., allied) army.
It's not very widely known because the allied attack was not successful, and especially because the Italian soldiers were so appalled by their perceived treatment by the Allied command that shortly after the battle morale in the whole italian co-belligerent army completely broke, and never really recovered until the end of war (unlike in the post-armistice Italian RSI (i.e., axis) units, which usually had decent to good morale).
In any case: the rather limited number of italian weapons/models/vehicles/guns makes very difficult to actually make such a map in FH2 so far
