If this coalition actually does form, it is minimal risk for Italy. Italy does not need to do alot and can pocket its territorial concessions without combat from the French and the Austrians whether the latter win or lose against Prussia. Going in on Prussia's side, at least without the benefit of hindsight, is riskier in case the French do well, especially if the Austrians are allied with the French.
The worst case scenario for the proposed coalition would be:
French lose A-L as OTL. The "market" probably would not bear Prussia taking more than a few extra square kilometers over OTL.
Russians take Galicia from Austria and have puppet Romania take Transylvania from Hungary.
Prussia, especially the military and King Wilhelm, upset at Austrian behavior after the "soft" peace of 66, are in note mood to listen to Bismarck's counsels of restraint, if Bismarck indeed bothers to make the argument for mercy at this time. Austria's "repeat offender" status, plus the likely disintegration of the monarchy as the war turns sour, will override objections that this adds excessive numbers of Catholics to the Prussian-led Reich.
The result - the new German Reich annexes Silesia, Bohemia, Moravia and the Archduchy of Austria.
Mainly as an "eff you" to the Italians for being on the wrong side, Prussia-Germany keeps all of Tyrol, Gorizia and Trieste and Slovenia for itself. Slovenes won't be a particularly troublesome minority, and this gives the new German Reich a Mediterranean port. Italy won't lose territory and the Prussians won't be in any position to do a pursuit to ravage them or charge an indemnity.