Just did some research, according to my sources, Iceland declared its independence from Denmark around 1944 when the mainland of Denmark was overrun by Germany.

I'm unsure of what you're saying with the numbers in your original post. Is a high 100 the best elite AI there is? What is 50? Where would normal AI be on your spectrum?

Note: I never play with Elite AI, only normal AI and real players. I just didn't think there was good reason to be in a situation like that making it harder for everybody (while possibly more balanced). I'm fine with some reasonable imbalances. The worst thing I ever have to deal with is the unbalanced 22-player map that so few play (the 100 player is usually fine).

The idea of an algorithm to decrease the chances of war between AI and anybody for reasons in terms of size, power or whatever could easily be abused. If you're Germany an attack by Denmark should be easily manageable, if you struggle with that, maybe you shouldn't play with elite AI, or you should defend any border with a foreign nation like you would do with active real players you're not allied with.

If you will be shortly at war with the world after you attack/defeat 6 countries, then maybe you should fight the more difficult nations first. So maybe start with Italy, France, Spain, the UK, and the other major countries instead of wasting your start time on these weaker nations. Besides, can't you stall war with the 6th country and build a massive army in the meantime? I would just make sure to manipulate the map so that I only have 1 main land front, preferably that I can handle, and my navy to protect sea-faring attacks.
I have personally never played the historic game blitz 10 player, and I don't know how this all works especially with the war with the entire world thing.
I recommend figuring it out in another way rather than suggesting a rebalance, I would think all elite AI should be around the same values, unless they count historical tensions too. And of course these smaller nations if left undefeated need to be less likely to declare war, unless everybody is at war with you. You don't want some Belgium to randomly choose to start this war, it should be started by a major power then Belgium joins the war with them, or joins a little later.