Those are two very different things. We can't go back and undo the past - the AfD is there and has those seats now. Whether it will remain in parliament in the longer term is very much a question mark, but as I said, I don't see them dropping below the threshold in the short term just because the Union changes its leader for a new election campaign.
To some extent this is a question of simple electoral mathematics - the old style of coalition with one bigger and one smaller party worked great in the Bundestag as long as there were only four parties anyway. With five parties, it became less certain. And now with six, it's again a whole lot less likely to work out. Whether the AfD drops some seats in a second election or not, whether the Union gains some seats or not, the odds for a Union/FDP coalition without a third partner don't look good until/unless the AfD disappears from the Bundestag entirely.
There is of course a much simpler solution that might satisfy you, which doesn't even require new elections although that might make it easier: a Union/FDP/AfD coalition. Which would certainly require the Union to replace Merkel as chancellor with a more right-wing candidate who would be palatable to the AfD, and willing to accept governing with the AfD. The strategic aim being, of course, to break the AfD by dragging it into government and letting it self-destruct, the way the Dutch establishment did with LPF fifteen years ago. I don't see it happening though, because unlike you I'm pretty convinced the Union has a good amount of votes to lose in the centre.