If we assume that the US leaves the Western Europeans with a sizeable nuclear starter kit, Kruschev probably doesn't invade: he was fond of brinksmanship as a politcal tool, but he wasn't entirely reckless, and was very interested in building up the USSR, a objective somewhat set back by a number of it's larger cities going poof. OTOH, without the US having troops on the ground, he will probably feel free to indulge in some bullying: I'd expect an effort to force a "solution" to the West Berlin problem.
Longer-term, if the US doesn't reverse it's stand, NATO is eroded and western Europe becomes to some extent "Finlandized": it's too small to be able to afford to play games of nuclear chicken with the USSR, [1] and if there was suspicion OTL that the US wouldn't be willing to trade New York for Bonn, what will be the thinking in a TL where the US can't be bothered to maintain boots on the ground? European politicians step softly when it comes to criticizing the USSR, investment flows eastward, Soviet gas and oil goes west. However, they stop short of allowing the USSR to dictate to them their foreign policy or their economic arrangements: they have a nuclear deterrent, and intend to keep it.
Eurocommunist parties probably do better than OTL, but by 1954 European economic recovery was well enough underway that any outright Red coups are unlikely: some Communist parties may even end leading governments in coalition with other groups of the Left, but will probably continue to respect the voters choices. There will be a lot of dirty deals and compromises, as in OTL's relationship between East and West Germany, but overall democracy and capitalism will survive in the West. The deterrent nuclear arsenal will remain larger than OTL, but there won't be any all-out militarization of Europe: it isn't really affordable, and would badly increase tensions.
On the Soviet side of things, there will be less tension without US and Soviet troops face-to-face, and facing a generally conciliatory Europe rather than a block lead by the often (rhetorically at least) belligerent US. Western Europe can be "milked" to some extent, and the Useful Idiots will work hard to maintain a generally friendly can't-we-all-get-along line. Of course, the mere existence of a much richer, democratic Europe to the west is a real irritant, in that no matter how polite the rhetoric remains, it is a reproof to the Soviet system by it's very _existence_. As long as the Soviet economy is still growing, and there are still victories in space technology or in the third world (does a US which doesn't consider Europe worth defending ever bother to get involved in Vietnam, one wonders?), this can be overlooked: a war would be dangerously destructive, cut off a big source of funding, be horribly bad propaganda-wise, and leave the main enemy, the US, intact. And simply letting Soviet troops go west would leave the army infected by discontent once they realized how very much better those Europeans had it.
This situation may break down once the Soviet economy starts to break down: with lower military spending and more European investment the USSR may do better than OTL, but it's still an utterly idiotic economic system. After the seventh or eight year of near-zero or negative growth, rolling those dice might look better...or might a move into the middle east look better?
The UK may be a bit of a wild card - by the 50's it was sinking in on the British that the UK couldn't really make a go of it as a power on it's own, and that the Commonwealth was a rather weak reed compared to the old Empire, but there was some reluctance to become part of Europe. That may be stronger in this TL, and the UK may try to reestablish some sort of "special relationship" with the US, if they will have them. Indeed, as NATO ties weaken, the US may be scrambling to do damage control: if Europe neutralizes, the UK as "airstrip one" becomes rather important...
Of course, the original POD is a bit ASB-ish. Possible scenario: Korean war expands into the War To Liberate China, which will be rather expensive. Europeans are a bit snippy over the use of nuclear weapons against the Chinese, and aren't cooperating at _all_ in contibuting to the 10-million man army which the US calculates will be needed to hold the country down until it can be deCommunified...
Bruce
[1] It's not just money here: I believe I read somewhere it would only take half a dozen good-size H-bombs to take out over half the UK's population.
