The indifference of the Vienna Government undoubtedly emboldened the nationalists of North Germany. Although the Sub-State governments didn't take a stand, the calls from the civilians were growing louder.
In order to proceed with his plans smoothly, Emperor George I even declared in private that establishing the North German Empire was a key step in the unification process of Germany.
On the surface, it seemed unproblematic, from a tripartite to a bipartite structure, indeed a step closer to the unification of Germany.
However, upon closer inspection, the problems were substantial. If the amalgamation of Prussia and Germany was considered the North German Empire, then the New Holy Roman Empire that Franz was scheming would become the South German Empire.
Who would unify whom in the future would require careful discussion.
Did George I want to unify South Germany under North Germany?
Well, if said aloud, probably no sane person would believe it.