How possible is it for Germany to have a peaceful unification with Austria in modern times?
Ja. I'll bet the Austrians vs Germans are a lot like Canadians vs. Americans: Like the jokeUntil you talk to the Austrians and find out what they think of the Germans.
The only way I could *possibly* see it happening would be Austria had been partitioned between the Soviets and the Western Allies. In that case, perhaps a small "West Austria" would have been merged into West Germany. After the end of the Cold War, perhaps "East Austria" would have merged back into Germany, or maybe it would have remained independent.
IIRC, OTL West Germany's official stance regarding the Polish- and Russian-annexed formerly Prussian territories were that they were "temporarily under Polish/Russian administration", and they only renounced all claims to them after German reunification.
And said compensation in OTL was...?