1) Austria-Hungary is hard mode, its the hardest nation in the game (except maybe England).
2) You can have other countries build your ships, preferably allies, in order to build larger than your dock. Also, don't forget to expand your dock, especially as AH.
3) Don't fight battles you can't win. All those absolutely antiquated ships can still put up a good blockade, if you have the numbers of ships on your side.
4) You're using the intelligence system, right? Your spies should have told you about the French ships well in advance of your war.
5) Design rebuilds by right clicking your ships, and selecting design rebuild.
6) With the enemy having BCs, cruisers are best used as raiders, which means cheap cheap cheap and long range. Otherwise, they fight fast ships of the enemy, but in your case, they'll just get ganked by the BCs. If you want to try running around the BCs and destroying merchant ships, go for speed and lots of smaller caliber guns.
7) I typically use my destroyers as Trade Protection ships, although they typically support your other ships, either as a support division that follows you around, or as Coastal Defense forces. Torpedo boats mainly, so max speed and torpedoes, maybe put on a gun or two to fight merchant ships. Maybe equip with mines so enemy ships more likely to hit a mine (its abstracted out based on the ships you have with minelaying capability).
8 ) If you have any aircraft that can drop bombs, build up your airports. France doesn't have much territory in the Mediterranean, and you do, so your airplanes can start to wreck havoc on the French Fleet.
9) Don't despair about your fleet: in the late 20s, everybody has to transition over from battleships to aircraft carriers anyways. You just don't have those soon-to-be obsolete battleships to maintain, so congrats. Pick the largest tug you still have left and turn in into your first aircraft carrier.
Good luck, France isn't that hard, although they're not as wimpy as Italy, and you have to move your fleet to blockade their coastline.