The Hungarians themselves only form portions of the population of Transleithania.The idea is to divide the Slavs and the Romanians from the Hungarians by giving them rights equal to the Germans.Of course the Hungarians will not consent to the idea,but no change comes without bloodshed.I suggest targetting the elimination of the Hungarian magnate class if they rebelled and dividing their land amongst the Hungarian peasantry to reconcile with the Hungarian population.
The exact policy that Karl Marx would have suggested if the emperor of Austria had asked his opinion. But he did not, and the Hungarian magnate class continued to stay on top.
In 1848-49 Hungary revolted: like the insurrections in other parts of Europe, it was a bourgeoise revolution not a Jacobin one. Did the Hungarian rebels offered to share power with the oppressed minorities (Croats and Transylvanian in primis)? They did not: their goal was a "liberal" Hungary (for a given value of "liberal"), but land reform was not really in the script, much less equality with non-Magyars. It is doubtful that the Croatians would have joined the cause of the insurrectionists even if the offer of power-sharing had been made (Jellacic was strongly pro-Habsburg and as early as May he went to Salzburg where the imperial court had holed up after the insurrection of Vienna to offer his sword to the emperor, and did not change his mind even when his offer was rejected) and it is almost sure that even the offer of breaking up the huge land estates of the magnates would have moved the peasants to join, but neither offer was made.
After the Russians invaded and put an end to the Hungarian insurrection, nothing changed: the magnate class was still top dog, the Magyars lorded over all the "nationalities" under the Crown of Saint Stephen. The Croats had been instrumental in saving the Habsburg bacon. Did they gain anything out of this? No.
Then the empire lost two wars in a row, and the Hungarians became again very restive: the solution concocted by the imperial government was the Ausgleich, which was not a reform (as it would have been needed), but rather a recognition of a power sharing between the Germans in Cisleithania and the Magyars in Transleithania and the granting of a kind of veto to the Hungarian parliament (note that the electoral franchise was very strongly limited: IIRC 6% of the population could cast a vote). By the beginning of WW1 the Hungarians were 17% of the population of the empire: they elected 95% of MPs in the Hungarian parliament (and the franchise had not been widened in Transleithania).
Maybe FJ might have decided to cut the rot and introduce major reforms in Transleithania rather than go for the Ausgleich: it would have taken a different man on the throne and a very different class of men at the top of the empire. Even if he tries to do that (which is very unlikely and out of character) it would take a civil war to get there. With Bismarck winking at the Magyars and the Russians looking from the other side of the border, a civil war might very well be too much for the empire to survive. The Ausgleich gave it the chance to vegetate for another 50 years, but at the same time it made impossible to carry out the deep reforms which would have been needed to make it a viable proposition again. It's a kind of loose now or loose later proposition.
As someone else has said, it might have been better for the Austrians to get reamed in 1848: loose Hungary, Slovakia and Transylvania, loose Italy and then concentrate on reforming what remains of the empire (which is still something significant).