So there are 3 modifiers to research, Catch Up Bonus (A), Sharing (B), and S&I(C). (A) requires the bonus giver (who leads in tech) to be in war, and on the opposite side. So before war, Russia and US will benefit from German and Japanese techs that are higher but not vice versa. (B) requires both countries in war, on the same side and sharing (p.190 of the Manual lists who shares with who. It's different from cooperativeness). Russia shares with no one and is shared by no one. (C)S&I does not require the country to be in war to boost its own research, or do S&I spotting, but does require both countries fully mobilized (doesn't have to be directly at war with each other) for one to cancel the other's research bonus.
So there were a couple errors in my original post. I have corrected them and reposted above. I've spend quite some time testing and believe the above is now all true.
The statement that "S&I only works when fully mobilized" is quite false. There are 3 functions of S&I:
1. Boosting your own research, which works better when you are NOT mobilized, as your enemy can't cancel this bonus until you are. This boosting is quite significant. If you constantly maintain more than 1000 mpp in research, you should consider S&I. US will be the country to benefit most from this.
2. Spotting opponent units. This does not require you to be mobilized. US will spot Axis units as soon as she reaches S&I level 1, way before war.
3. Canceling opponents' S&I bonus. This only works when both you and your opponent are fully mobilized.
The statement "Only highest S&I level for a Side (Allies|Axis)counts", is only true when it comes to canceling opponents S&I bonus. It doesn't apply to the other 2 functions of S&I.
So it's quite critical for US to get S&I ASAP. I would sell almost every US tech and 2 chit Ind Tech, 1 chit S&I on turn 1, and 2nd chit S&I as soon as I have the money (turn 3). This will make US eventually very powerful, can lead Germany in several techs, and can almost fight Germany 1 on 1 come 1944. This is why the game is now very single dimensional for the Axis. It's either Russia or bust. A successful Sealion could mean a loss for the Axis, if the Allied player knows how to deal with it.
It's kind of urgent for UK to 2nd chit S&I when she can, to make sure the Axis don't get ahead in tech before US gets in the war. I may not invest the 3rd chit for UK though, unless UK reaches lvl 1 very early.
Very helpful ideas, especially 2nd S&I chit for UK which I haven't done in the past. In addition to a return on MPP invested in S&I, there's the strategic benefit of catching up with German tech.
On the flip side for Axis, should Italy throw a chit in S&I to slow down Allies?