I'd be surprised if IAG would throw EU1bn around just for a short term punt. They must see some long term strategic value as well. Walsh is also astute enough to know that he wouldn't get away with asset stripping EI for it's LHR slots and wiping it off the map like he did with BMI. EI has a stronger brand and market loyalty in Ireland than BA will ever have, and is currently profitable. As such it would most likely remain as a complementary stand alone operation and brand within the IAG group.
Yes of course IAG will continue to squeeze as much traffic through LHR as they can, that's their model. But having a secondary hub available in DUB (and with the benefit of US pre-clearance to boot) gives them options and a safety valve in the longer term especially if LHR R3 gets kicked into the long grass again.
I doubt the hard product on AA's 763s and 752s from DUB even entered their thinking. Some of those aircraft are getting new interiors, and the rest will be gone in the next few years to be replaced by 787s, or A330/A350s from the former US Airways fleet. Meanwhile their target EI already has A330s, with A350s on order.