As a variant of my "different 1866" TL, sometime ago I posted a scenario where Germany remains divided into Northern and Southern states, with a twist.
Italy makes a very good performance in the 1866 war, so it asks for all its claims at the peace table, and Prussia is prompted to ask for Saxony and Bohemia-Moravia. Napoleon III intervenes on the side of Austria, the resulting conflict ends in a status quo stalemate in the Western front, but the Prussian-Italian alliance reaps what it wanted from the helpless Habsburg Empire, which faces ultimate collapse. Desperate Francis II again appeals to Russian help to save its throne, promising Galicia and total Austrian support for Russian expansion in the Balkans. Russian military intervention quells nationalist rebellions in the Habsburg empire, although it is effectively a Russian client-puppet now. French and Russian influence fosters the birth of a South German federation between Austria, Bavaria, Baden, and Wurttenberg, to match the North German Federation built by Prussia.