Fair enough; but the intent was to be a counterfactual version of the 1940 Franco-British Union attempt; but with Franco leading the charge for it, and succeeding in having it implemented.
Yeah, but while the Franco-British Union in the 1940s was something very unlikely to happen itself, a Spanish-Portuguese Union in the 1920s would be completely impossible for a multitude of reasons.
First of all, there's the fact that Spain has always been cast as the boogieman in Portuguese popular imagination. Many of our national heroes were people who fought to preserve Portugal's independence from Spain, and one of the most basic tenants of Portuguese nationalism, which was always widespread in society and was faring particularily well as political force in that period, consists of affirming the differences between Portuguese and Spanish national identities. A communist/fascist revolution may seem scary for some Portuguese people, but not as much as the prospect of being absorbed by their larger neighbours
Also, we must consider that the Portuguese and Spanish regimes at the time had radically different political ideologies. The Portuguese republic was a new one, and, as such, it was naturally very militant when it came to its republican character. They were also avowedly liberal, strongly anti-clerical and somewhat nationalistic, and they would become more and more of that as time passed. Spain on the other hand, was a highly conservative Kingdom under a reactionary autocracy. The two regimes had almost nothing in common, and were most likely to be antagonistic toward one another. Having someone like Franco being put in charge could only make things worse.
Whoever ended up in charge of the Portuguese government's would absolutely not make such a deal with the Spanish, and even if he did contestation would be so large that there would be no Portuguese government to unify with Spain to begin with.
Anyway, as I said, if you still insist in having a Portuguese-Spanish Union in your TL, it's your choice and I won't stop reading because of that. But I'm absolutely sure it's ASB.