Tokayer relied heavily on friendly discussions with Inuzuka Koreshige, a self-appointed "Jewish expert" who may have personally wanted to see such a colony. While "The Fugu Plan" is not an accurate account of the actual policies pursued by Japan's military and civil bureaucracy, it is an interesting depiction of the flights of fancy entertained by some within the military chain of command, viewed with rose-colored glasses by veterans romanticizing about the war and further reinterpreted by a non-Japanese-speaking rabbi as you said.

There was never a serious proposal for a Jewish colony during the "peacetime" Manchukuo of 1931-1937 (this was not actually peacetime since Japan was fighting "bandits" in Manchuria and the KMT on its border, but it was relatively peaceful compared to what came after). During this period there were actual White Russian refugees temporarily settled in Manchukuo, which might have made the idea of inviting Jews sound less ridiculous to people like Inuzuka who had a Jewish obsession, but others with deeper knowledge of Japan's own colonial programs would have understood that this was not feasible. Japan successfully attracted 100,000s of its own citizens to do "pioneer" farming in Manchukuo, and this had given rise to a host of problems. The security and economy of Manchukuo was held together by a network of command-economy managers from the South Manchuria Railway Company, military men, and Chinese collaborators. The farmer-pioneers were more of a liability from a security/economic perspective, since they were subject to raids from Chinese "bandits" as well as internal stresses caused by their remote locations. Their chief value was for ultranationalist propaganda and for staking a claim to more permanent occupation of the region. Even if Jews were willing to come, a possibility which was never investigated, a Jewish colony would have had neither of these political benefits, and would have added many more liabilities for Japan as a host nation.

Now let's move on to the Holocaust. Inuzuka loved to make up grand stories after the war about his plans for the Jewish refugees that did arrive during the Holocaust, and it is true that after Pearl Harbor his superiors allowed him to visit a refugee shtetl in Shanghai and tell them with a both callous and conceited choice of words that "if God exists, this war was sent by God." (citation 1) He had something like a sense of divine mission. But there was no actual Japanese policy that they were accepting refugees for the sake of building a colony or anything like this. The actual refugee policy of the wartime Japanese empire is that they accepted refugees because they had a humanitarian obligation to do so under international law.

In retrospect, some have said that this was a convenient and selective use of international law on Japan's part, given their Geneva Convention violations elsewhere in China, and that some kind of Fugu Plan-style expectations must have been involved. But you can make the same accusation about any country that accepts refugees or immigrants: whether for labor or for wealth, countries may expect immigrants to be useful in some way. The fact of the matter is that whatever the reasoning, the Jews who made it to Shanghai and Kobe were generally allowed to stay, even though we know from archival documents that the Nazis were aggrieved by this. (citation 2) Not all Japanese in the military were friendly, and some were explicitly anti-Semitic, but many thousands of Jews survived the war thanks to a combination of the genuine and risky humanitarianism of diplomats like Chiune Sugihara in Europe, and the less controversial efforts of bureaucrats and military officers like Inuzuka in Asia.

Regarding the use of the Protocols of the Elders of Zion in Japan, I think the book Jews in the Japanese Mind has a decent overview of this. The bizarre, counterintuitive reading that you can see from online articles is basically accurate. As for where this reading came from, it's kind of beyond the scope of a short overview essay!

citation 1: Eber, Irene. 2018. Jewish Refugees in Shanghai 1933–1947: A Selection of Documents. Göttingen: Vandenhoeck & Ruprecht.

citation 2: Bistrović, Miriam 2011. Antisemitismus und Philosemitismus in Japan. Entwicklungen und Tendenzen seit dem 19. Jahrhundert, Essen: Klartext.

note: To make things easy I've limited my summary of the Japanese figures involved to one person here. To get a full picture of the small network of ideologues and military administrators who entertained a Fugu Plan and their various motivations, as well as other varieties of Japanese anti-Semitism, you'd have to read several articles. Jews in the Japanese Mind has a few characters in it