Alright, I've got comments on both the PoD and the outcome.
People have rightly questioned the plausibility of the PoD. I don't see the Kaiser just up and Deciding to start a war w/ Britain from a standing start. Germany ended up gaining Samoa, one of its 3 profitable colonies [Togo and Nauru were the other ones] as a result of OTL's settlement not a bad deal.
What is needed for war at this time is for Germany to be more stubborn about reciprocal concessions and being more annoying to the British in terms of demands, deployments or support to the Boers in the belief that whatever Germany is doing is not enough to provoke britain to actually go to war in retaliation. Germany needs to push Britain beyond its endurance enough for the British government to decide that tolerating Germany's moves is worse than having war with Germany. Perhaps one shift could be Chamberlain becoming convinced that a German war would be an opportunity to strengthen relations with the Dominions by dividing up colonial spoils with them.
Perhaps if the Kaiser never sent the Telegram to Kruger a few years before, and had faced Britain's apoplectic reaction he would not have truly seen how dangerous supporting the Boers (or supporting the German proxy rebels in Samoa) actually was.
As for the outcome and course of a war, I would think:
a) Neither can defeat the other, but Germany will lose any colonies Britain chooses to take.
b) Other powers will most likely *not* join in, without additional multi-poddage and other contrivances.
Why Russia won't attack Germany:
Russia does not have much animus against Germany at this time, Russia hates the Brits and sympathizes with the Boers. Russia has a couple years old deal with Austria-Hungary to put the Balkans "on ice". Russian expansionist energies are more focused on the Far East than Europe at this time. No amount of British or French funding would suffice to "purchase" Russian belligerency against Germany.
Why France won't attack Germany:
Lack of Russian support will cool French enthusiasm for fighting Germany. Despite the ever-present desire for regaining Alsace-Lorraine, France, the 1890s and up through the Morocco crisis were an era of much reduced tensions. The French may explore this Anglo-German war as an opportunity for a revenge war, but they would have to be highly confident they are set up for success. At a minimum, they would require Russian support in the east [which we've ruled out] *or* a British commitment not just to aid a subsidize & French offensive on the ground against Germany, but a commitment to actually commit British armies to the fight. Theoretically, the British could make such a commitment in order to force the issue decisively, but the odds would favor them not doing so, because based on an easy cost-benefit analysis, they could be confident in defeating Germany in the colonies and oceans in due time without having to launch an expensive land campaign which would mostly serve French interests.
Why France won't attack Britain:
It knows its naval inferiority. It knows it has much more overseas property exposed to British attack than either Germany or Russia. Fighting on Germany's side is too bitter a pill to swallow. It knows that warring with Britain increases Germany's advantage over France on the continent. France might super, super secretly, explore a deal where they join the German side, in exchange for the return of Alsace-Lorraine. But Germany will find that too high a price to pay. Germany will feel confident it can unilaterally defend all its land possessions.
Why Russia won't attack Britain:
It knows France doesn't want to. It knows war with Britain is expensive and hazardous. It is more focused on expansion in the Far East (Where it has not been entirely unsuccessful) than expansion on its borders with Afghanistan, Persia and the Ottoman Empire at this time. [Witness their unwillingness to join British anti-Ottoman initiatives a few years earlier]
So, while the left to their own devices and druthers, France might be tempted to fight Germany, and Russia might be tempted to fight Britain, the effect of their allies' competing priorities, the high costs of getting involved and the high benefits of profiteering as neutrals means the most plausible media via *at this point* is to remain neutral and trade with both sides, with France sitting back with some wine and cheese, and Russia sitting back with vodka and caviar.
c) both British and German sides will suffer economic losses and confiscate each other's property.
d) German colonies can do no more than raid before being invaded and occupied. German involvement however could encourage the Boers to fight on a bit longer. The war will not be cost-free for Britain. In the end, the British will run down German commerce raiders, and the British Empire forces will occupy all German territories they did in OTL's WWI, providing services for the Empire like investing Australia, New Zealand and the Cape Colony in sub-imperialism and unification of the Cape to Cairo route. The British *might* hesitate to take Kamerun or Togo, if only to spare themselves the expense and to leave the door open to France to come in on the British side. The British might employ a similar logic and hesitate to take Tsingtao and Micronesia from Germany to leave the door open for Japan or the US to come in on their side.
e) Britain probably could not be induced to trade back any colonies they occupy. In no settlement would the British give back any of the colonies in the Pacific south of the Equator, or Tanganyika or Southwest Africa, because their utility to the Empire and Imperial cohesion is too great. The others might be negotiable, [provided Germany somehow gets leverage which is hard to see], but if for example America or Japan are the ones to occupy Tsingtao or Micronesia, Britain has no ability to restore these to Germany.
f) There will not be submarine warfare because of technological limits and certainly no unrestricted submarine warfare because of the # of militarily powerful neutrals this could offend. There will be commerce raiding, with gradually shrinking affect as the raiders are hunted down.
g) Blockade will harm the German economy. It will also interrupt the German trade overseas in goods, to the advantage of neutral and even British firms. The naval disparity may enable Britain to implement a close blockade, but that would be one of the few courses of action that would expose Britain to naval losses. Consumer prices will rise, but over time cross-border trade in Europe will boom. As some have said the infrastructure as it was at the time will impose some limits on affordable cross-border trade. Aside from some neutral merchants & producers, other people making the most money from this will be people who own property along desirable rights-of-way for road and rail building, and rail investors.
h) The blockade will not lead to any Germans in Germany starving, nor impair military capability. With its land army in Europe "unemployed" it will hardly be enlarged and it will expend consumables at a peacetime rate. There will be no diversion of labor, animals or machines from agriculture. A peacetime Germany can probably be food self-sufficient, and it would have sufficient financial liquidity to purchase other food from neighbors linked by land transport.
i) The war will get very boring with each side running out of things to do fairly quickly, at the same time, the difficulty of coming to terms could delay any formal peace treaty or armistice for a long-period of time. Both countries will have lobbies for restoring "business as usual" but the German lobbying for such will be more desperate.
And a Franco-British one is possible, but the "Hey Europe, wanna dogpile the UK with us?" britscrew from earlier parts of this thread is simply impossible. Germany and France were basically doing this;