Tensor factor subalgebras question

After some serious arm-twisting performed by some TMP students I accepted to run a seminar on Foundations of Quantum Mechanics under the condition that it would be a no-nonsense class. This is in addition to the String Theory Lectures I have to teach as well.

After coming back from our vacation and workshop I found myself in the situation that I had much more fun doing some reading for the seminar (reviews on decoherence etc) than preparing for the string class (given that I have already twice taught Intro to Strings and that there are David Tong's wonderful lecture notes which give you the impression that you could take a few pages of those and be well prepared for class).

In the preparation, I came across a wonderful video of a lecture by a well known physicist (I will link this later as I might take part of this as a quiz for the first session. Let me just mention that it contains the clearest version of Bell's inequality that I a am aware of).

I am convinced that a lot of possible confusion about quantum physics together with locality (let me only mention the three letters E, P and R) comes from the fact that people confuse the roles of observables and states: Observables can be local and causality is built in by asking operators localised at space like distances to commute while states are always global objects. There is nothing like "the wave function of electron 1" or only in the approximation where you ignore all the other particles. You cannot use it when talking about correlations etc. But this is not bad, even in classical (statistical) physics, there are non-local correlations, like the colors of the socks on my two feet. The fact that in addition to correlations, there can be entanglement in the quantum theory does not change that.

Furthermore, I find it helpful to think (of course I did not come up with this approach) of the Hilbert space (and its wave functions) as a secondary object and take the observables as a starting point (and not derived as the operators acting on the wave functions). Those then are the elements of a (C*)-algebra and the Hilbert space only arises as a representation of that algebra. Stone and von Neumann for example then tell you that there is essentially a unique representation if the algebra is that of canonical commutation relations.

States are then functionals w that map each observable A to a complex number w(A) (interpreted as the expectation value). This linear function has to be normalised, w(1)=1 and positive meaning that for all A one has w(A^* A)>=0 (did I tell you that formuals are broken?). Then the GNS construction is similar to a highest weight representation: Using w and the algebra, one can construct a Hilbert space: As a vector space you can take the algebra. It is a representation after defining the action to be simply left multiplication. The scalar product of the elements A and B can be given by w(A^* B). Positivity of w tells you this is at least positive semi-definite. One can quotient out the zero-space to obtain something potitive definite and then employ some C*-magic to show that the action by left multiplication can be lifted to the quotient. I have suppressed some topological fine-print here like taking completions etc.

The states correspond in general to density matrices (or reducible representations) and as always can be convex combined as x w1 + (1-x) w2, the extremal states corresponding to irreducible representations.

In quantum information applications (as well as EPR and decoherence), one often starts with a Hilbert space that is a tensor product H = H1 x H2. Restricting attention to the first factor only corresponds to taking the partial trace over H2 and in general turns pure states on H into mixed states on H2. This has the taste of "averaging over all possible states of H2" but in the algebraic formulation if becomes clear that one is only restricting a state w to the subalgebra of operators of the form A1 x id where id is the identitiy on H2.

What I do not understand yet and where I am asking your help is the following: How does the splitting into tensor factors really work on the algbraic side? In particular, assume I have a C*-algebra C and a pure state w. Now I take some subalgebra C1 of C and obtain a new state w1 on C1 by restricting w to this subalgebra. What is the relation of the two Hilbert spaces H and H1 I obtain from the GNS construction on w and and w1 respectively? What is a sufficient condition on C1 that I can regard H1 as a tensor factor of H as above?

A necessary condition are obviously dimensions in the finite dimensional case: Here, the C*-algebras are just the complex matrix algebras of size n x n and the irreducible representation is on C^n. This is only a non-trivial tensor product if n is not prime. But nothing stops me for example to start with the big algebra being the 17x17 matrices and the subalgebra being those matrices that have the last row and column filled with zeros. But C^16 is definitely not a tensor-factor of C^17.