Ok, here's a guess which I'm sure isn't right, but it is different.
For Germany to be that sucessful in the north, but so unsucessful in the south, I think we have to look at a Protestant liberal movement which is ousted in the south by the Austrians. Prussia is eventualy forced to join, probably by a combination of diplomatic pressure and revolts. Eventualy Russia, seeing no powerful enemy in the west, invades the baltic. North Germany jumps to the rescue. France, fearing a mobalised Germany, joins on the Russian side. When Germany wins a very strong victory against the Russians, Belgium and Holland join an alliance for protection with France. At this point, a popular military dictator type is elected into power in Germany, who sucessfully beats the French, and annexes the occupied land in the Baltic and Holland and Belgium.
Meanwhile, without the support of the Prussians, Austria becomes a sitting duck, and looses land to the Italians, who may be in some kinda alliance with Germany.
As a part of the peace agreement with Russia, several independant countries were made that became German satelites. Either that or they revolted after Russia became weaker.