The Soviets were big fans of floating unrealistic schemes that they knew would never be treated seriously, either to gain capital for later, test reactions, or both.
And that's the most realistic outcome. If NATO calls their bluff you're going to get some kind of negotiation wherein one side or the other will walk away for some reason that will be described as an unacceptable condition placed on membership by the other.
Realistically the Soviets can't allow it if for no other reason that a NATO USSR is basically going to have to allow the reunification of Germany. 1954 is before thingsgot really finalized in terms of the structure of the two Germany's, but at no point are the Soviets going to be willing to give up their buffer state and create a country still quite capable of challenging them.
Ultimately if it somehow DID happen without other fundamental shifts (ASB, but lets go with it for now) there are two major shifts: Germany is reunited and probably ends up more or less western (though quite possibly with the whole country getting something of the atmosphere of divided Berlin). One interesting note is that this might be a way to get a Germany with post war talk of pacifism similar to Japan. In terms of NATO itself, it's obviously going to fade from importance; quite simply what is it going to do in this form? IMO it eventually ends up being a largely hollow shell that acts as more or less a UN military command structure. At the same time a much more secretive set of anti soviet military planning is going to be a necessity between at the very least the US and Britain. The actual power structure is probably going to have a disturbing similarity to pre-WWI Europe with weirdly interlocking and very secretive alliance structures with conflicting and problematic war plans established.