As the title states is it possible for South America to have European majority, just like Canada and Australia??
In South America as a whole? Yes, but it would require a different sort of colonization, with more European families and less single young men as it happened OTL. And a bigger genocide of natives. And less acceptance of mix-raced children (IOTL, mestizos were treated worse than whites, but better than Indians; if they were treated as pariah, as the kids of children of two different castes were treated in India, there would be less incentive for native American women to having kids with whites)
And even so, you'd still hava majority (or, at least, a significant minority) of Amerindias in the Andes. In the area that was once part of the Incan Empire several crops had been domesticated and a sophisticated agriculture had been developed, which allowed the existance of a huge population by the XV century. No matter who colonizes southamerica and how many Amerindians die, the area formed by eastern Ecuador, Eastern Peru, Western Bolivia, Northern Chile and Northwestern Argentina will always have a significant Amerindian population. The continent itself, however, can have an European majority
If possible how would it change American, and British policy to the continent. Of course thats assuming there is a USA
Not much, if at all. Uruguay is almost entirely European, and during the cold war the US supported coups there, in the same way it did in mostly Indian Guatemala.
a South American great-power that could challenge Britain arise?
It is difficult, because Britain with always have a head start. You could still write a TL were that hapens, but you'd need to chaange many things from OTL.