Wouldn't this do a number on the English economy?
If the still Catholic Tudors become intransigent, we might se much worse than OTL religious troubles, possibly leading to a dynastic change or an earlier English revolution or even larger emigration of "puritans" to the N. American colonies.
All in all, a very interesting POD, although I reckon that keeping Britain Catholic would be rather difficult.
Meanwhile, how would Pope Wolsley act in Italian matters? Papal/Imperial hostility is a given, so a realignment with France, his British heritage notwithstanding?
All very true, and the Tudors can't afford such a thing, so at some point a break with Rome, or a more English version of Rome might come about.
I'd say he'd follow his King perhaps, or perhaps go with France aye