Eritrea won't be the most bugshit crazy dictatorship on Earth outside of North Korea at the very least. Hopefully, Ethiopia is improved now that it still has a coastline.
I'm more inclined to think it would make the situation worse really. Most likely if Ethiopia 'won' the Eritrean War of Independence, then Eritrea would likely become another South Sudan. Which I suppose is... better than rl independent Eritrea, but it would make Ethiopia more like (North) Sudan.
I don't think Ethiopia could really win this war, the best they can do is turn what is already a 30 year civil war into a 50 year one. In the first place, Eritrean forces were vital for helping Ethiopian rebels overthrow the Derg.
So first scenario, the Derg remains strong enough to prevent Eritrea from seceding, but fighting what is fundamentally a colonialist war, are not actually able to bring stability to the province with their occupation. The Ethiopian army results to increasing atrocities to combat guerrilla warfare by the the Eritreans and to keep them in line. Even once the communist government is removed, Eritrea remains the mistreated and abused stepchild province of Ethiopia (along with the Somali provinces), with regular human rights abuses by Ethiopian security forces and Eritrean resistance both. We end up with a second Sudan. Might not be worse than Sudan, but Eritrea is unlikely to give up and the harder Ethiopia tries to keep them the worse it becomes.
Second scenario, in OTL the Eritrean army was vital in tying down Ethiopian troops and providing assistance to Ethiopian rebel forces. Once again the Derg manages to contain the situation in Eritrea somewhat and weaken the Eritrean resistance. By extension weakening the Eritrean army ends up weakening the EPRDF fighting the Derg. Alternatively the Ethiopian coalition refuses Eritrean assistance because they maintain that Eritrea belongs to Ethiopia.
The result is a slower going Ethiopian civil war, with a weaker EPRDF and a stronger Derg. Instead of fleeing the country the communist leadership fights a last stand at the capital before being defeated. Rather than recognizing Eritrean independence, the EPRDF insists that even with the defeat of the Derg they will continue to fight the Eritrean Independence War. The strain of continuing to hold onto Eritrea drives friction between the fragile EPRDF coalition and drives the consitutant rebel groups apart, sparking a second civil war for control of Ethiopia that ends up wrecking both Ethiopia and Eritrea. Fundamentally, a second Somalia on the Horn of Africa. And then the real Somalia invades to liberate the Somalia provinces.
I'm not saying Ethiopia couldn't hold onto Eritrea for longer or maybe indefinitely. But if they try, it's going to be ugly, neither the Eritreans or the Ethiopians are going to be happy about it, it's probably not going to be worth the blood or make things better, and it's probably not even going to work in the long run. Little different than European powers trying to maintain control of African colonies.