I don't think that Entente would allow keeping monarchy even if emperor would be only formal head of state. Only way with 1918 POD would be that Germany is somehow get victory or stalemante over France. Then perhaps Entente could demand that Wlhelm II abdicates.
I think you'd have to change dynasties, if you wanted to keep a monarchy in Germany after WWI. Wilhelm absolutely had to go; I'm pretty sure the Hohenzollerns have to go. Bavarian royals might be a good choice. Were there any surviving Wettins?As I said I think the main thing that the western allies wanted was for Kaiser Wilhelm II to be off the throne. I think that it would be more likely for a grandson to be named as heir with Prince Henry named as part of the regency council.
If one moves away from the Hollenzollern family I think that that next possibility is Bavaria's Crown Prince. Well respected by the army and by a lot of the politicans in Germany. He would be likely to make Germany a stable Nation that is democratic.