The Germans would have treated the Latvians OK, as they considered the Latvians and the Estonians (I believe) to be Germanic peoples (descendants of Teutonic Knights, or some such crap), worthy of incorporation into the Reich as full-fledged "Germans". The Russians treated the Balts just fine during Russian Empire days, and many Balts/Baltic Germans held very high positions in the Russian bureaucracy/military. Given that Nicky and Willy were cousins, there was much love between the Russians and the Germans in general.
When the Soviets got the Baltics back in 1940, the area was subjected to NKVD cleansing of undesirables ("bourgeoise", clergy, politicians, teachers, and similar riff-raff), so there is no reason for those people to love the Soviets. I'm sure the Germans treated them better. Frankly, many people who'd been subjected to Stalin's "love" (such as Ukrainian peasants) initially welcomed the Germans, until they realized their role in the Reich was "slave labour"...
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