Even if the Austrians go back to monarchy, how much power would this king have?
Figurehead Archduke most likely. I'm sure Dollfuss knows that empowering Otto gives the latter a chance to undermine him when things settle with Germany (assuming they are beaten back).
It might prevent Nazi fascist alliance. Musso couldn’t stand Hitler initially. His earlier efforts to safeguard Austrian independence.
Very likely. A successful Dollfuss will make Austria seem stable to Mussolini and worth protecting. I can totally see a Rome-Vienna-Budapest Axis iTTL becoming a reality to undermine Germany and the Little Entente.
Ok suppose Dollfus survives and restores the monarchy after a talk with crown prince Otto and 1938 comes around and hitler demands a referendum and Dollfus refuses calling hitler a dictator with the 4 years of time Dollfus has constructed a mini maginot line what happens next
IOTL, both Germany and Austria were relatively weak (Austria even moreso) since at this point, Germany doesn't have the resources and gold reserves of Austria and Czechia. The success of an Austrian defense depends on a few points:
1) Italy intervenes in this 'Alpine War' as Hitler launches Fall Otto in response to a Habsburg restoration,
2) Dollfuss has successfully limited Nazi influence in Austria,
3) The Austrian populace has been made less complacent (with pro-Anschluss forces silenced) about a German annexation, either with Dollfuss being more successful in pushing a new national/cultural identity in Austria or simply playing up anti-nazism after the coup attempt. Left-wing and Far-left forces are likely not to sit it out this time either, since Hitler won't have a fait accompli.
4) Big if, but St.-Germain-en-Laye restrictions are lowered somehow? Without thr post-assassination complacency, maybe the West begins thinking that Austria might be serious about fighting off Germany? It would seriously help Austria if they didn't have thosr massive Versailles restrictions.