I woukld suspect that a smarter Japanese move would to fake the invasion of Midway and destroy the US fleet there, then make their thrust into the S Pacific at Samoa and Kiribati and cut the air links to Australia.
That would be the smart thing to do. Secure their southern flank by isolating Australia. Then they are going to have to attack Australia. While I don't think the logistics of taking a continent were in the Japanese ability (either North America or Australia), I don't think it would've stopped them trying. Of the two attacks, Australia is the much more likely scenario.
Ren, only brought up attack on the US for two reasons:
1. Sinpac noted he had read something when he was younger about how Japan saw winning the war. It was a point that always had me wondering. How was Japan honestly going to win the war if the US didn't just give up (as was the plan)?
2. Where does Japan go after Midway? One of the reasons the US held 6 battleships back from the Midway battle (on top of speed problems) was the need to cover the West Coast. By attacking the West Coast, the Japanese could effectively isolate both Midway and Hawaii. Essentially, Island hoping in reverse. While we now know Japan had neither the logistical or productive capacity for such an act, it was not generally accepted as gospel in 1942. And the US strategists had to consider what the Japanese could do and not what they would do. The West Coast of the US, especially after the run the Japanese had (and in leiu of the attack on Pearl Harbor) was definitely an option. Not a good one for the Japanese, but still an option.
Getting back to the battle. I think the Japanese would've taken Midway. It would've been difficult but they could've gotten it done. First, after the US Carriers are gone, there is only the Airpower from Midway to worry about. It was not effective in strike capacity and destroying the runways would've ended that problem. There after, the affect of Naval Gunfire combined with determination to take the islands at any cost would've eventually brought a successful invasion.
That being said, Hawaii is tricker to do but a logical step (even given the above point about the West Coast, it would be more in line with the Japanese way of thinking to attack Hawaii after Midway). Sys has the right idea in attacking a smaller island before Oahu in order to establish an air base. The US has no effective carrier force left, so for the momment, air reinforcements are unlikely to the Oahu. But I don't think the US would pound the Japanese out of existence right away. Between the two sides, at some point in the Pacific, whether it is Guadalcanal or New Guniea, there is going to be a battle of attrition the Japanese will lose. Hawaii is a good bet that this will occur.
But the nuts and bolts of that fight (Air Battles, Naval Battles, Reinforcement runs by the Tokoyo Express) will be similarto those of '42/'43 and the really interesting point of the campaign.