Why not? It was effectively a continuation of the Gulf War and the subsequent sporadic bombing campaign. The War of Terror and such merely sped up the American efforts. Not sure, I suppose they might try and overthrow Saddam by less conventional means, but that is such a bother.
(full encirclement, as Iran, Pakistan, Afghanistan, NATO, China, and Japan would all be allied against the USSR)
Not really. Iran was also hostile towards the USA (moreso than towards the USSR, in fact), and Afghanistan was never particularily anti-Soviet - or important, for that matter.
they would fall because of isolation
When has isolation alone ever killed anyone (especially a proper totalitarian state, such as North Korea which has tons of problems but is still alive)? Plus there won't be all that much isolation. There still is South Asia, for instance.
Quite possibly Finland, Central Asian Republics and Baltic States would declare independance but Soviet Russia might still exist
Firstly, Finland was already independent.

Secondly, I doubt that the Communists had any chances without the USSR, but the USSR did have some chances of surviving. Basically things will either go roughly as in OTL or the USSR will survive, either through hardline measures or through intricate and fortunate reforms. The former is the more likely option for its survival; in that case, there would be no concessions by definition. The latter might lead to the loss of the Baltic states, but the Central Asian Republics didn't really have any serious separatist movements; the local leaders only decided to broke away when it became clear that the centre wasn't keen on continuing the union.
One problem I have with the new portion of the timeline is that it seems to ignore the Hundred Years War already in progress. France won't really be in position to invade Italy at present, so if such a war does occur it would likely be more within France itself. At the same time, England by 1380 was already exhausted and generally unable to prosecute the war, so I don't think that it would be able to really take advantage of the French reversals (which are in themselves doubtable). You yourself have mentioned the peasant uprisings; won't stabilising the situation at home usually take precedent in the order of priorities?
Other qualms:
- Execution of opposing cardinals sounds a bit too radical; but there might have been some precedent, so not really sure.
- The succession in Hungarian realms sounds unnaturally smooth, especially considering its irregularity and the legal disparity between the realms. Are you sure that it would go that way? Especially in Poland.