The religion barrier is the biggest obstacle to this that I can think of. There is no way that this could happen after England goes Protestant.
If England stays Catholic, this could be rather interesting. I could easily see royal marriages between trusted allies against the Spanish leading to a personal union.
The Dutch would probably have a much harder time holding the East Indies, now that their two biggest rivals are uniting against them. I think the East Indies could end up a lot like the West Indies; split among various colonial powers.
The Dutch could end up as open enemies of the English for much longer than OTL, and a more permanent alliance with France once Spain starts declining and France emerges as England's biggest rival. This would have rather interesting effects on the European wars of the 1600s. I think the Spanish Netherlands aren't going to last long when attacked from all sides.