It's an interesting idea - a sort of spreading of the Spanish Civil War (which the Skirmish Wargames Group do do in 54mm). Unfortuately, like the other posters say, finding c1938 civilians in 1/35th will be a challenge, though there are some around, eg European refugees. SWG do 1/32nd, nor 1/32th, so we are not up on the stuff available in that scale, I'm afraid (there really is a big difference in the size of the figures - think old 20mm and new 28mm).
As to tanks in such big scale games - they become set dressing, and something to hide behind! The rules should make them slow to respond to what is happening on the table - ours certainly do - and thus they do not dominate. In fact they become very vunerable, especially if there are a few mines around, or the terrain in snowy and sloped (rules for sliding) or someone opens a hatch to get a better look around... We have incorporated them in WWII and SCW games quite successfully.
Mike