What would be realistic fallout from vetoing their application?
The question would of course be if EU/NATO want to do that. It's part of the usual political horse-trading game.
For sure, in the extreme scenario if US/EU/main partners really wanted Finland and Sweden to join and Hungary vetoed, it could be made to pay an unaffordable price.
But Sweden is already member of the Cuture Combat Air System (FCAS) initiative to create a 6th gen air war system of systems, alongside nato members. And this kind of colaboration will be even more natural when/if they join Nato.
Also the real question would be, would Hungary see it as a credible threat. Were they to go ahead with that, they'd find themselves with no airforce and unhappy allies. That sounds like a raise they couldn't afford to raise.
But even if not, in the most extreme case, everyone else could leave NATO and simultaneously join NATO++, which is just NATO without Hungary, but with Finland.
(And because that kind of process is possible in theory, I would suggest that any organisation with a voluntary exit clause might also want to have a clause that allows the unanimous vote by everyone else to expel one member. Maybe..)
This is all speculation about the most extreme consequences. Other commenters wrote more realistic things about trade in weapons being disrupted.
And, of course, you could set up 'NATO++' as an alliance between US, Finland and other willing nations, without shutting down old NATO. Just like Ukraine receives a lot of assistance from NATO countries these days without being in NATO.
https://www.france24.com/en/europe/20220405-top-eu-body-laun...
In such a case, Nato could in principle invoke Article 60 of the Vienna convention, and if all other members agreed, they could expel Hungary from Nato. Similarly, if their conflicts with the EU continue to escalate, they may be expelled from the EU in a similar fashion.
This would be a catastrophe for Hungary.
Not that I believe that it would ever come to this. Just a hint of this from key Nato/EU countries should be enough to make Hungary back down.
More likely, if Hungary wants to buy some favour from the Kremlin, they would drag out the expansion process by a few months.
I don't think anyone wants that big hole on the alliance's border. Hungary might not be as critically positioned as Turkey, but it's still in a pretty awkward place.
But as you say, Orban could drag his feet a bit. Chances are his party enjoyed direct funding from Moscow, like others in their orbit all over Europe.
Without a shared border with Russia, Hungary's usefulness in a conflict would be relatively limited for Russia. On the other hand, for it would be highly dangerous for Hungary to willingly align with Russia, as that would make it likely that a future conflict would be fought on their territory.
As long as Sweden and Finland remain neutral, they are at risk. Putin has shown that he is willing to use military force to grab land. Should he grab Finland and Sweden, he would effectively control the Baltic sea and also have bases that can reach Western Europe much more easily than he can at the moment.
On the other hand, with Finland in the alliance, Nato has a highly defensible (for Nato) shared front with Russia, in the case of a conflict.
Also, keep in mind that Finland + Sweden together has a greater population than Hungary as well as maybe 5x the GDP, and that while Hungary is moving towards totalitarianism, Sweden and Finland both have long democratic traditions, low corruption, etc.
Very different ones.
Sweden has been independent forever and a democracy since 1921.
Finland was first a part of Sweden, later an autonomous part of Russia. In 1917 it became independent and a democracy. However, a bloody civil war followed. Although it did not last long, consequences in politics and society remained visble for generations. Between 1945 and 1990 there were limitations to the democracy. They would only do what was assumed not to annoy the Soviets too much. Party leaders and prime ministers were chosen according to that principle. Freedom of the press existed only as long it was not too negative about the Soviet Union.
While it changed with the end of the Soviet Union in 1990, they could join EU 1995, applying for NATO marks only the real end of that period that they could not freely determine the direction of their country.
But that is not what I mean when I say "democratic traditions". Especially for countries that introduce democracy gradually and (mostly) peacefully, I consider the whole transition period to be part of those traditions. A country like Sweden had more than 100 years (1809-1921) of public discussions and political manouvering to build up the institutions, culture and education that provide stability, legitimacy and public support to such a system.
Finland underwent a similar development from the end of the Civil War to 1990, which mean that in 1990 the democratic institutions and traditions had already been built.
Other Warzaw pact countries had varying amounts of democratic traditions at that point. Some (like Hungary) had seen little democracy. Others, such as Czechoslovakia had been mostly democratic in the interwar period, while most had seen some democracy and some authoritarian rule in that period.
I would argue that those traditions from 100 years ago play a part, even today. And in the case of Sweden vs Finland vs Hungary, Sweden and Finland both have very strong traditions for democracy (even if the age of those traditions are different), while for countries like Hungary and Ukraine, those traditions are still shaky.
More realistically, they could just spin up an alternative alliance between US, Finland and any other willing current NATO member (but excluding Hungary). And over time move more and more importance to this new NATO++, and perhaps even eventually drop out of old NATO.
There's no provisions for kicking countries out of NATO. But everyone else leaving the club is equivalent to kicking one country out.