That case for Australia is really cool, but I am going to have to disagree with it for a number of reasons. One of the things that worked out really well with my model (and yes, that scale was way off, I didn't know it was only 200 km across. Still, I hold that it is something similar to that, but smaller .) was that the Anglean Republic is based off of a Viking-esque culture, you can see it in the clothing. In the case for Germany the Angleans are decendants of Denmark, the original Vikings.
I do really agree that it is more likely for Asia to pull down into Australia rather than run right around to France/Germany, but let's consider the Leviathans (place holder name). They are the giant machines that dwarfed everything, their engines and control rooms are still in Battle of the Dunes and Duel at Dawn. A representation of their size was made somewhere on this part of the forum, I recommend checking it out if you haven't already. If one existed, it would be the size of a small town, potentially carrying a huge number of people from place to place. I propose that in some form of alliance or pursuit of self-interest, some Asian superpower (like China or Japan) took a few of these and landed a flank on France while they were fighting on the western front. If done at the right point in the war, it would cripple the already weakened France (over-exertion of resources) but may leave the army isolated from their homeland, and after all the fighting is over, they would have to create their own society in their conquered land. We have only ever seen what nations can do in a period of roughly ten years or so of hard war like this, and out of them we got nuclear energy, tanks, advanced air fighting machines, chemical warfare and much more. Imagine what a power mad alliance of tyrants could do in fifty, especially without the restrictions set in by the Geneva convention of 1925 preventing the usage and production of chemical and biological weapons. The effects are unimaginable, and potentially worse than even nuclear bombs themselves.
I'd also like to make the point that the Mercantile Guild is of Venician origin, a city directly south of this part of Germany. Because people didn't really interact with each other before the age of air, I don't think they had naval technology to even cross the Abyssal Gulf. Even if they did, would they really be able to navigate from the Mediterranean all the way to Australia? They would have to be extremely talented navigators and have tons of supplies, and besides, once they found this place, why would they stay? If they traveled that far, they likely are just traveling traders and while they might stop there a lot, there's no real reason to set up a country.
As for water levels, I wasn't saying they would raise up, the Firnfeld is proof they fell. Though I think the maps you are looking at are in the event of a maximum ice age, in which all of northern Europe is covered. In the game, and in my theorized location, the Ice only goes to the south of Denmark, leaving the north of Germany mostly ice-free. While the amount of water saved from that ice may not be much, it would be enough to flood a plane such as the Abyssal Gulf and the Sea of Devils should they have been bombed to a lower altitude. If there were some sort of mega-bomb deployed in carpet bombing runs enough times over generations, the result should affect the altitude significantly, seeing how low most of this piece of Europe sits. Again, the technology created is of unknown magnitude, but if human nature has anything to say about it, we should assume the extreme.
While Labyrinth shows no significant signs of bombing, that may just be a result of speedy construction. You can see the cranes everywhere, the place went up faster than they could manage, which would mean that this was definitely a time where the work was valued over the worker. Regardless of the cost of life, they would have to grow, and should they be bombed, they might have just picked up the rubble and continued building. That is a more fantastical idea, but a different slightly more practical explanation for Labyrinth is that is is not any major city at all. In fact, it may just have been a town that the people from the heavily bombed areas of Germany ran to, causing the massive need for shelter and jobs. If Germany was being forced into a corner on all sides, this may have been one of the last stands for the Germans. If so, all their military might would be on protecting this one city, which would probably allow for them to destroy any foreign bombing raids before they even come close. The tanks all over the streets of labyrinth could suggest extreme martial law, or the dying battle of Germany, the one that ended with everyone dead. From what I understand, Labyrinth is one of the few cities of it's kind, so having it as the final city for an entire country doesn't seem like such an unrealistic idea after all.
Cool stuff.