Scales of Imagining

I am weighing two choices in imagination creation - lets call them the large scale approach and the small scale approach.  

The small scale approach is the traditional old-school wargaming method for fighting "age of reason" battles without being bound to actual history.  Since the territory of the Holy Roman Empire was filled with small states it is a small step to co-opt a small bit of generic German geography and place the imagined states within it.  In most maps I have seen the geopolitics are rather distorted - while conceptually the states are small, the armies they deploy and extent of their territories would really be significant in the mid 18th century.

The big plus of the small scale solution is that it allows the inclusion of historical states and the extended political context of the 1750s.

To my mind the big minuses are

1. It requires large scale distortions to include naval operations.
2. If I want to go beyond the conventional confines of 18th century gaming to include colonial or fantasy elements then conventional Europe is in the scuppers altogether.

The large scale approach is a bit bolder.  Of course,  fantasy maps from Middle-Earth  to Westros have left us accustomed to imagined geographies resonant with our real world but with their own cultures and technology; however I also want a somewhat "firmer" rooting in the real world; not very firm, but the sort of mix of silly and plausible that sets hoaxes like the da'Vinci code, Chariots of the Gods, and vikings in Minnesota in the human imagination.

My idea for a large scale approach is to "create" a landmass in the Indian Ocean centering a bit north and east of the French Kerguelen Islands.  The relic of lost Lemuria "was" discovered by a party of European crusaders of many nations attempting to find and recruit Prester John to their cause.  They conquered and converted the natives, founded their own kingdoms, and prospered.  They have never actually lost contact with Europe, sending their sons to Europe to study.  Considering themselves as Europeans, they follow the latest trends of their parent nations with great dedication; the latest fashions and books from Paris are to be found in the new land sometimes before they reach some parts of Russia.

With that approach, I can include naval warfare, lace punk, elephants, Indians, and even ancient forces of lost Lemuria deeply inimical to the progress of man.  It's a stretch, but then it is just a search for a fun context in which to place a gaming environment.