Here is our scenario:
Ottomans DOW Venice, Papacy chooses not to intervene.
Haps DOW Venice. Can Papacy intervene?
5. DOW on Venice: If a declaration of war is made against Venice,
the Papal player may immediately spend 2 CPs to intervene. If the
Papacy intervenes, Venice is activated as a Papal ally (Section 22)
and the Papacy is now at war with the declaring power.
Thanks for anyone who can answer this...
There is nothing in the rules that says you can't.
Yes the Papacy can intervene. But then that gives the Ottoman the choice to DOW the Papacy at no cost. See Step 2 in 22.2:
2. Declarations of War: A power currently at war with this minor
power has the choice to immediately declare war (at no cost in CP)
on the major power that is activating the minor power. That power
may only declare war if none of the “restrictions at all times” listed
in Section 9.6 apply. If the power chooses to declare war, add an
“At War” marker to the appropriate box on the Diplomatic Status
Display. If the power declines to declare war, any units of that power
occupying spaces controlled by this minor power are returned to
the nearest fortified space (that is not under siege), as described in
Step 3 of the Peace Segment Procedure (9.3).