I remember in the Churchill's history multivolume history of World War II, he says that the UK offered this to France just before the fall of France. So France would not have to surrender but would fight one, with the UK inheriting the French fleet in the meantime I suppose. Seeing the desperate situation Britain and France were in at the time, it made some sense. But why in the 1950s? Surprising.

Would the fleurs-de-lis be restored to the Royal Arms, or would that double the offense to French republicans by suggesting yet another Capetian restoration?

I think, Céline, only French historians were shocked to hear this. It was a fanciful idea of Guy Mollet, who was a great Anglophile. No other Frenchman of any eminence would have supported it and Mollet didn't discuss it with anyone important in England except Eden, who said "No thanks".
And of course Eden's conspiracy with the French over Suez did for him not long after.