The Austrians probably couldn't accomplish such a thing in the first place.

The southern German states - especially Bavaria - were much more powerful and had more of a national identity than the scattered northern states which punctuated Prussia, and it would have been difficult to establish total hegemony over those regions.

The other issue is that by the time Prussia formed the North German Federation Austria was a multi-ethnic empire which owned massive tracts of non-German territory. Hungarian, Slovak, and Croat citizens would disapprove of a 'German Federation' if the idea arose. On the other hand, Prussia was homogenously German except for a Polish minority in the easternmost regions. The citizens of Prussia would theoretically be more on board with the formation of a (North) German Federation than citizens of Austria.

The idea of two equally powerful rival German Federations is an interesting situation, but probably one which will remain relegated to Victoria II.