(Had to look that up myself!)
Judging by retrospect and bits and pieces of what Senior had had to say in the past, that itself informed by Inchicore and York Road thinking a generation earlier, it seems likely that had no border ever existed, the overall Derry - Killybegs spine might have developed as more of a "through" route.
With Henry Forbes simply being a small cog in a big Dublin-centric organisation, the early dieselisation simply would not have happened, but it's reasonable to assume that the mid-1950s modernisation, as on the West Clare, would have done.
Branches and anything north of Buncrana or west of Letterkenny (or Stranorlar) would have had no better chance of survival, but on the proviso that either the Derry Road or the INW line had survived, we might still have a line from Pennyburn to Letterkenny, and from Victoria Road to at least Donegal town, operated by diesels. At the least, an influx of Walker railcars and "F" class diesels would have kept it going until the 1975 closures, at which time these - plus the track - would have been in need of replacement. Goods would have been gone by the early 70s.
But of course, nothing but speculation.
Donegal 2.6.4T in plain grey, anyone? The cherry red would never have existed at all in the above scenario!