If they are all within the same federal polity, workarounds and compromises for really contested areas can be arranged, such as making Trieste its own city-state.
In 1848 Italians basically did not care much about Trieste. It was "Germany" (Habsburg land) since the 15th century and it had a majority Slovenian hinterland. Ah, and it was a free city within the Austrian Empire yet, as it was Fiume/Rijeka.
The big problem in a Great Habsburg Federation would be the Slavic nations, especially the Czechs and Croats, and to a lesser extent the Poles. Such a league would be German-dominated, with Italians as the second partner. Magyars may be unhappy with that but still accept this: that's sheer demographics, and provided they are given the third "rank" they would settle with it, contenting themselves with oppressing Slovaks, Rusyninans and Vendians a little. They would have to compromise with Croats like they did OTL post 1867, of course. This leaves the Czechs as the major thorn in side of any Habsburg German-Italian dominated combine, with Slovenians as side ally. Like OTL, again.
My point is that if the Habsburg dynasty chooses to ride the tiger of nationalism, it would be even more embroiled in the contrasting claims nationalisms are bound to do (especially in an area historically and ethnically unfit to host nationalists of any sort). In the long term, they cannot support national claims from Germans, Italians, Hungarians and probably Poles and dismiss the ones of the Czechs. And there is no unbloody way to settle German and Czech nationalisms together once they have become mass movements. OTL the solution was forced expulsion of almost all German-speaking people from historical Bohemia and Moravia in 1945, after the Nazis had tried the other way (destroy the Czech as a people and enslave what's left).
