Because:
It's clear you haven't done any research besides "Hey Margaret of Scotland was going to marry Edward II-to-be" and a couple peaks at wikipedia.
Your writing is riddled with issues (Example: "When Emperor Edward VII of England dies in 1522 at the age of 71, he outlived his only surviving legitimate son Richard." Changing tenses in mid sentence is a no-no.)
You have paid no attention to the issues raised with Edward II trying to make his son King of Norway.
You have paid no attention to Edward II's own reign, despite the fact that would have a huge impact on his son's.
And that's just the beginning.
The concept of Edward II and Margaret of Scotland marrying and having issue is fascinating, and a good timeline could certainly be written on it. It is even possible that Edward III might press a claim to the throne of Norway TTL. That would be interesting, even if unsuccessful.
But this isn't that "good timeline".
Seconded.
And aside from all this, what also doesn't seem to be understood here is that the very idea of a king suddenly proclaiming himself 'emperor' and creating a new political entity ex nihilo would not only be foreign to the fourteenth century mindset, but utterly preposterous.
A king can't just 'create' new political institutions in his realms and territories. 'States' at this time (and I use that term in the loosest sense) were, for the most part, patchwork collections of territories and entities, often with numerous regional languages, identities and laws, all of whom happened to share the same nominal feudal overlord, nothing more. Ruling several realms in personal union multiplies the limitations to be overcome--and that's to say nothing of the various entities in each realm who may or may not possess conflicting interests and who are going to be furious at anyone entrenching upon their respective privileges (e.g. nobles, royal towns and burghs).
And furthermore, it would be impossible for any Christian prince to claim the title of 'Emperor' unless he had been crowned by the Pope--an act requiring election by this time as German king (the precedent having already been long established). Full stop. At this time, there was only one emperor in Catholic Europe, and that was the Holy Roman Emperor, who held his title, with the support of the Church, by virtue of his position as perceived legal successor to the Roman Emperors.
I'm sorry, but it is impossible for any 'Great Northern Empire' to exist as a political entity at this time in history. You may have several kingdoms held in personal union by the Plantagenets, but even that is going to be rather difficult to achieve at this time in history. Hell, a lasting Anglo-Scottish union in the fourteenth century would have been pretty damn hard as it was, let alone one that included Norway and various other countries. And, as Elfwine and others have said, you still have not given us any of the details as to how exactly this is achieved, let alone how it is maintained ITTL for even the reign of Edward III.
So, in short, 'no'. It's not ASB, but it's damn close to impossible.