First things first.
1) What could the British colonies do? Their forces in Africa were tied down fighting in Egypt (which granted it is possible they could have completely defeated Rommel alone) Australians and other colonies in Southeast Asia and in the Philippines were fighting Japan and things weren't looking up.
2) Hitler did indeed suffer a defeat in the Battle of Britain resulting in Germany giving up any plans of invasion. Despite this however the German Navy was very strong. It was wreaking havoc on British shipping, and with a little more pressure it could have mounted an effective blockade which, carried on for long enough without American intervention, could have starved Britain into at least withdrawing from the war. I don't believe Hitler was insane. Yes he did terrible things namely, the Holocaust. I think that he thought he was doing the best thing for the German race, it was evil but does that make him insane? Was Stalin insane because he did the same thing even on a grander scale? As for assassination attempts, for the most part his generals only began to plot after it became clear to them that they were fighting a losing war as a result of Anglo-American victories. Most famous of course would be the July 20th plot of 1944, but attempts like these were not being carried out by German generals during the Axis victories up until around 1943.
3) Yes indeed the Messerschmidt could only be challenged by the British fighters, which is the precise reason that England survived the Battle of Britain.
4) The attack on Russia was a colossal blunder on Hitlers part. Historically that was to be one of the decisive blows to Germany, however consider the situation proposed earlier. America remains uninvolved, and the Kriegsmarine can keep Western Europe relatively safe allowing Germany to transport the cream of the army to Russia where they could keep pushing and eventually would overwhelm the Russians. Now keep in mind that the reason Germany lost in the Eastern front was: 1) The Germans came without most of their tanks and artillery in their rush to destroy Russia. 2) With fighting in North Africa, then Sicily and Italy, and later Normandy, The German army was too occupied in the West to provide the support necessary for victory in the East.
Now I submit to you that this situation would be disastrous to England. Left without any hope of support from the continent, and having to cope with the ever increasing pressure from Germany and it's allies, England would not have gotten stronger but weaker. Despite the indomitable spirit of the English people they would have eventually been battered into submission having in all likely hood lost their Pacific holdings to Japan, and North Africa to the renewed efforts of Germany after the defeat of Russia. Germany would have been stronger than ever effectively ruling Europe. They would have increased the quality of the Kriegsmarine and the Luftwaffe resulting possible in the destruction of the Royal Navy and RAF, and hence England itself.
