One can take the high road or the low road, the path through peace, prosperity and integration, or the path of war, necessity and oppression, but I am pessimistic on the low road. The USSR attempted to force its subjects into a collective that failed once the secret police no longer had the mantel of the Party, beside why simply reinvent another bleak fate for Germany and her neighbors? So I choose optimism.
Here I assume the Germans do not fall into revolution and more or less it is the German Reich at center, Kaiser and Reichstag, an industrial nation with minorities, capitalism and a wary military. The suggestion that a USSR be born I think is very helpful as would a revolutionary France. I would also pre-suppose that the British were not belligerents in this alt-Great War and the USA played a tangential role but perhaps more so in mediating an armistice. The British and Americans would soon trade aplenty with our Middle Europe and likely see it as a bulwark against the anarchy at least looming if not sweeping Europe. Here I would think the likes of Hindenburg did not usurp all authority as a dictator and the usual civilian institutions moderated things enough to not fully alienate the conquered peoples to the East. Yes, I think they are conquered and regard themselves only uncertainly "liberated", this should lead to a few decades of unrest as those people's nationalism waxes under German influence. I do not underestimate the strong nationalism, the independent cultures and disparate languages, these all proud peoples who had distinct identities, but I would not use that to quash all hope they could not integrate. The USA is a diverse nation, Europe now more so, both have achieved and continue to work at integration while acknowledging the uniqueness of their peoples. Here you have perhaps 100 years of quiet and no truly vicious Second World War founded in hatred, bigotry and extermination to drive deep scars into the fabric of Europe, the wounds of the Great War were bad enough, those worse, but I would say a long chilly stand-off would let the wounds heal fastest. The Cold War pushed the French and Germans together with the Belgians, Italians and Dutch, we have the EU to demonstrate how economic cooperation could pave the path to greater political integration.
My bias is that the USSR will be dangerous and destabilizing but not a true threat, it will stalk and pounce on weakness yet be wary of a Germany accessing as much people and resources as it. Add to that a more robust British Empire and free wheeling America spanning the globe too, the USSR even with a Red France or more would be caught in a Mexican standoff facing two less than friendly old Empires and an American business giant asserting itself as arrogantly as ever. We might get an Imperial Japan or resurgent China to further muddy the waters, a Fascist bloc or other alignments that keep this world dangerously balanced.
I would argue that Germany builds a Customs Union and hammers out a mutual defense alliance, something that blends the EEC and Warsaw Pact, a bit heavier hands akin to how the Soviets bullied Eastern Europe, but without such ideology to keep it so the Germans likely ease up to give enough independence that few of these states feel compelled to join the "enemy." I would suppose that the various distrust and chauvinisms between the Eastern peoples keep them aligned to Germany as the mistrust each other one on one. But give that a generation or so, recall German will be a prevalent lingua Franca on the continent, everyone will have increasingly interconnected trade with the German juggernaut, and their militaries will increasingly cooperate. That might give us enough bridges to begin the dismantling of immigration boundaries, push for a unified currency (the Goldmark is likely already de facto), and coordination of various standards, measures and such to facilitate commerce. Again we have 100 years from 1917 to 2017 to see these nations coalesce. Is it a United States of Europe? I think that might take more time but it may well be better integrated than the EU seems to be, it may be closer to that next step, without more war, more privation and the foundation of mutual cooperation spanning yet another generation or more things could be looking very much like what the OP seeks. I do not think it is too utopian, the challenges are deep and dangerous, but I can see the right alignments to give it a strong "plausible."