Malta wouldn't have been easy, but I'm pretty sure they could have taken it in early '41 with a full effort. It's very close to Italy, and the Italian navy's major base at Taranto. To stage a heavy invasion attack with strong air support would have been very feasible for the Germans and Italians. For the British to defend adequately would have been very difficult.

Anceint Briton - I agree that the Russo-German conflict was inevitable...in time. As inevitable as the Cold War that came after '45. However, it was not inevitable in '41-42. Far from it. Stalin did everything possible to avoid war with the Germans. He desperately wanted to avoid such a war. He happily supplied them with everything they wanted in trade, and worked hard to avoid provoking them.

Therefore, I higly doubt that the Russians would have pushed west while the Germans were occupied in the Med. 1941 would have been the crucial year...and the Germans would only have needed about one third of their available forces to take the Med...in my opinion. Another third could have been used to tie down the British in western Europe (by still threatening an invasion of the UK). The remaining third could definitely have secured the Reich's eastern borders against an attack by the Russian army which was at that point inefficient, mostly inexperienced, and poorly commanded (all of which was amply demonstrated in the initial German attacks on Russia in June-November '41). The Russians would have been clobbered had they tried to attack the Reich in '41, and I think the chances of Stalin wanting to risk it at all would have been virtually nil. Stalin was a cautious man when it came to such adventures, and the Russian attack on tiny Finland not long before had been a bloody and embarrassing disaster where the Russians lost probably ten men for every Finn they killed. You think he would have risked attacking the whole German Reich after that? Not bloody likely.

As for Hitler, it was asinine to get into a 2-front war against 2 major powers, which is what Hitler did when he attacked Russia in '41. It was the most idiotic decision in the whole war, I'd say. The time to attack Russia was much later....AFTER the west and the Med had been secured, and the war with the UK brought to an end. The way to secure the west was to put the British in such a bad position that they would wish to negotiate their way out of it. The way to do that was: take the Med and hold it. This would have put the British under a tremendous strain, Churchill would probably have been voted out, and a new government would have bargained with the Germans and reached a settlement, agreeing on their respective spheres of influence...which was what Hitler had actually anticipated would happen after the fall of France in 1940.

Hitler had always seen the British as his natural ally against Communist Russia. He was no doubt bolstered considerably in that notion by the friendship of a few upperclass Britons such as Unity Mitford, and by the fact that every government in the west in the late 30's (with the exception of the shortlived Republican government in Spain) was extremely anti-communist anyway prior to the beginning of WWII. Churchill, for that matter, was extremely anti-communist...UNTIL he needed them! ;-) Such are the vagaries of Realpolitik. Churchill quickly returned to being extremely anti-communist as soon as the Nazis were defeated. I believe it was he who coined the term "Iron Curtain", shortly after the war in Europe had ended. I think he hated the Russians just as much as Hitler did.