I for one would have no problem with using existing nationalities to represent nations or factions not covered by ASL. What those would or should be be is really up to you. I have only the vaguest idea about the various factions in the 4 to 7 cornered fight that was China and none about their relative ability.
I understand your caution. I recognise that the NRA/GMD had 2, later 3 levels of training, equipment and favouritism and ASL recognises such distinctions by restricting the use of 537/447. However we are not talking NRA here, so such distinctions and restrictiions don't apply, in my view. Rather than an E class warlord squad representing a part of a Praetorian unit, I would suggest that it is just a better squad amongst a continuum of ability, The Good (E), The Bad (1/2) and The Ugly (C). Look at many scenarios and you will see a mix on one or both sides, eg an early Soviet battalion from, say, ASL 128 with 5x628, 24x447 and 12x426.
Just as the CWaPRA/PLA has its own 'rules' then don't hesitate to use what combination of module specific rules and counters that you feel best suits you. As for the quality, if AotNE is fighting against another warlord army then a good sprinkling of AxMi/It 447 in with 347 against NRA 337 might be best but against Japanese or Soviets then use 347 with some 336. I think it is quite legitimate to tailor your forces to reflect relative abilities. The prospect of facing the IJA or RKKA would, I imagine, be a very different prospect than beating up on ill-armed and disciplined rivals from the next county or province. You might take liberties with the latter but not the former two. As well we have to recognise that the lions of one CG date might be reduced to burnt out husks of the next CG or visa-versa.
I severely doubt that many scenarios accurately reflect the historical balance of forces (British in PB and Germans in LFT's KGS excepted), few would be anywhere near game balanced if they were. Within reason (No, No! No SS squads representing AotNE, naughty, naughty boy!) as a designer you are free to utilise whatever you feels best represents a new force in relation to the existing nationalities. We have already seen NRA counters in the guise of Korean labour troops in BRT, AxMi as Thai, BIA/BNA, IRA and INA, so AxMi as AotNE is not outrageous. The only problem with using Italian troops are their dreadful LMG.