The calcified, mildly dysfunctional Dual Monarchy of 1914 was in no manner "disintegrating". There were problems, and loose talk about it becoming the new sick man of Europe, but it certainly hadn't reached that point yet.
On the other hand, if Franz Ferdinand does become emperor, there's a pretty decent chance of collapse as a result of his reform proposals. Empires usually collapse not under calcified, backwards leadership, but when attempting to reform.
I'd also say that I'm not sure Prince Heinrich wouldn't have focused on the Navy. Unlike his brother, he was actually a career naval officer. But he was pretty unpolitical OTL, so it's kind of hard to see what path he'd take. Certainly the naval build-up won't take place as long as Bismarck's in charge, but even if we assume that Bismarck manages not to offend enough people to have to be removed, and doesn't want to retire (the latter, at least, seems plausible), he died in 1898 OTL. At that point, new people come in, and who knows what they think. Of course, that's also towards the point when the new Emperor comes into his majority. OTL, the Crown Prince was pretty terrible, but growing up without his father will certainly change him in some respects. I have a hard time thinking that he'd turn out much better being emperor from early childhood, though.