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That doesnt matter when the enemy has vastly more men and material than you. It is about staying power as the German AI will relentlessly attack your lines until they crumble, with little to no time inbetween attacks for your forces to recuperate meaning you will want as much organisation as possible.
Having a mix of both 7/2 and 10 inf divisions might actually be beneficial as the main reason your line collapses is that forces tend to deplete at the same rate. If you have different templates defending then some will retreat at a different time compared to each other giving meaning you may be able to reinforce the line before the other has to fall back. Note I haven't tried that out, it was just a brain fart that came to me.
If yes, as Netherlands, you can use extra manpower from the Dutch East Indies. As they are an integrated puppet, you can use all their manpower to create colonial divisions (lesser puppets use some of your manpower in a 10% to 90% ratio I think from memory).
You need to copy a template from your puppet which you can then edit using your army XP or produce as is and it uses your weapons cache/production but your puppet's manpower.
Click on Recruit & Deploy tab, then click on the crown icon next to the Division Designer and then select the template you want to use (e.g. Infanterie Division) by selecting Copy, which copies it to your usable templates. The template has the flag icon form your colony to show it uses their manpower.
You're still limited by your equipment/production and by your colony's manpower but Dutch East Indies has a lot of manpower (900K+at game start I think).