Yeah, I think this is a good start. Having a Kingdom in the Italian region would make wonders for its cause, considering all the influence it could get over time. Having a unified, inheritable, royal title would drastically change the outlook and dynamics of the Empire and would surely be considered to be a permanent Electorate once an alternate Golden Bull writes down who could vote and who couldn't. Basically, what happened to Bohemia, which was not even part of the "German Lands" to begin with.The Habsburgs were planning to recreate the Kingdom of Arles via Clementia of Habsburg and Charles Martel of Naples, the claimants of Hungary IOTL.
Also, and in a totally unrelated way, there was a chance for Francis I of France to inherit Savoy. Francis was very close to the Duchy via his mother (Louise of Savoy) and a few deaths in the Savoyard royal family would make him heir to the Duchy even before he became King of France. And yes, it sounds a bit convoluted, but weirder things have happened in OTL.
Then, keep everything else more or less as OTL, and he would make a bid for the Emperorship, but now he could argue that he is, legally, a member of the Empire, but of the "Italian side".