No, not the Duchy of Lorraine. I'll come to why in a moment.
The unification of Germany in the 19th century spurred decades of Franco-German enmity, stemming initially from the Franco-Prussian war. French revanchism, German aggression--blame what you like for the three French-German wars from 1870--but the conflicts there were ultimately disastrous for those countries, and Europe as a whole.
To sidestep all that, let's lean on Bismark's dangerous strategic thinking either closely preceding or during the campaign against Napoleon III's France. Instead of annexing Alsace-Lorraine into the German Empire directly, Bismark pushes for an independent, neutral nation to stand between the new Germany and defeated France. The Prussian King himself was not particularly favorable to the idea of direct annexation of the area, and had to be persuaded by Prussian military thinkers that control of the western bank of the Rhine was critical. Now, if Bismark is actively pushing for a neutral duchy instead, that may be enough to change the outcome without further meddling in the timeline. If need be however, perhaps we can postulate a slightly different course of the Franco-Prussian war that weakens the arguments of the generals, and convinces Bismark independence is the way to go.
Granting that, the final peace between France and Germany will look rather different. Hoping for as minimal a change as possible, I suggest the major points of the treaty would be:
1. A large indemnity placed on France, some of which may go to the establishment of the Lothringen state.
2. France recognizes the irrevocable independence of the Duchy of Lothringen, with OTL's Alsace-Lorraine borders, plus the wedge of land east of the Moselle. This was not done OTL given the misgivings of adding a significant francophone/ethnic French population to the German Empire. That would be less of an issue for an Alsatian dominated independent duchy.
3. France and Germany recognize and guarantee the absolute neutrality of the Duchy of Lothringen.
4. France and Lothringen are forbidden from merging, and France is forbidden from transiting military forces through Lothringen without the consent of both Germany and the duchy.
5. France surrenders all claims to its enclaves and administered areas in India to Germany. Germany agrees to the transfer of those areas (such as Pondicherry) to the United Kingdom in return for Heligoland and fair compensation. (I have no idea what that would amount to, probably a hard bargain from the UK, given OTL)
6. France accepts occupation (and its costs) of various areas more or less as OTL until the indemnity is paid, but this also would include the costs to Lothringen in the ATL.
7. Germany agrees to remove occupation forces from Lothringen according to framework x.
8. France recognizes William of Prussia as German Emperor, and recognizes the sovereignty of the German Empire. France also recognizes [Mystery Man X] as the rightful Duke of Lothringen.
n. Other concluding points over waterways, prisoners, trade, or miscellaneous.
Within that general framework, Germany and France come to peace, and now all the effects and butterflies come out in force, with lots of unanswered questions.
First, who would end up as the Duke (or Duchess, I suppose) of Lothringen? It would be tempting to put one of the German noble families on that throne, but that would seem rather out of sorts with the notion of an independent neutral state buffering France. It might be more appropriate to look at one of the Low Countries for a new Duke, which might not be all that exciting, even if the Belgian King Leopold gains the title. He was rather liberal at home, oddly enough. I'm not so sure the Hapsburgs would be a good choice, but is there some obvious branch I'm missing somewhere?
Second, will France be as motivated to pay off the indemnity as quickly as OTL? Still plenty of patriotism in France, of course.
Finally, how does this affect the international politics of the late 19th century in general? France has a belt of neutral states between it and Germany, at least one of which would have to be violated for either country to invade the other. Further, the Alsatians (and French) who decide to remain in Lothringen aren't being held prisoner by the evil German Empire in a permanent occupation. As an independent state without a German presence, it's harder to justify some of the rationales for French revanchist thinking, though I'm sure one can consider the Lothringen government a group of sell-outs and German stooges from a French perspective.
In any event, both France and Germany would have a bit more freedom of action from the other if the Wall of Neutrality between them is credible (which is a critical question, I admit). If Bismark has a bit less urgent need to keep France isolated diplomatically, what kind of geopolitical capital can he spend in the ATL?
I suppose the only way to answer some of these questions is to determine how likely it is that the neutral states in the Rhine valley are credibly neutral buffers. If either France or Germany is arrogant enough to disregard elements of that neutrality, then we're probably back to OTL in a number of respects. What say you?
Lacking good map-making skills, allow me to present this rough map of Europe under the ATL.
Not the greatest masterpiece, but 'twas quick and easy. I like that. Thanks to whomever made the base map.