> Just throw in a new avatar of Vishnu to legitimize it and carry on.
Except for it's never done. No Hindu believes Allah or Jesus is an Avatar of Vishnu.
It can't be. Vishnu literally means the "All-Pervading One". Allah is explicitly not Omnipresent. Jesus is Omnipresent but does not have infinite forms. So neither fit the bill. Even Buddha, who we Hindus associate as one of the Avatars of Vishnu is not the same Buddha as Gautama Buddha who founded Buddhism.
I'm not knowledgeable enough about Hinduism to argue the first point but that's too reductive of a view of Christianity and Islam.
There's a rich history of panentheism in both. Ibn Arabi, probably the most famous Sufi scholar was known for defending it ("[God] sleeps in the rock, dreams in the plant, stirs in the animal, and awakens in man"), Meister Eckhart and the Rhineland mystics held similar views etc. Of course that often got them into hot waters with Orthodoxy but it certainly existed and continues to exist.
A lot of these traditions are much more flexible than whatever is the dogma or institutional version of the time suggests. David Bentley Hart's writing on Vedantic traditions and Christianity is worth reading
I distinctly remember an Indian man on a bus in Kerala striking up a conversation with me (random white obvious tourist) in which he proclaimed both that he considered Jesus his Lord and Saviour and that he considered him to be an avatar of Vishnu. Not an explanation I'd asked him for, but certainly made a change from the standard bus conversation about where I was from and was I married yet and what salary...
I'm sure you are right that many/most Hindus would consider this incompatible with their belief system (and even more sure your average Christian would think he was missing the point of accepting Jesus as his Lord and Saviour), but this sort of syncretism definitely has been attempted and found its converts, probably rather more of them than Akbar's attempts to combine Islam and Hinduism.
I'm also reminded of this mostly unrelated comedy sketch :) https://www.youtube.com/watch?v=8tw7LIykvBw