What if...
I read in Gerry McAvoy's Rory Gallagher semi-biog that Gallagher was the turn on at the venue the night before The Band recorded The Last Waltz and was invited to play the next night but turned it down on the grounds that he already had a gig booked. How differently would Rory's career turned out if he'd played this with Levon Helm on drums, Robbie Robertson on guiter etc? And how much better would the film have been?
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Maybe
Well we can speculate about how his career might have turned out differently but I don't imagine that the film would have been much better with Rory's inclusion. It's just about perfect as it is, don't you think?
A pedant writes
Acksherly, Rory played Winterland six nights before the Last Waltz show on Thanksgiving Day, 1976 (when he was indeed playing elsewhere, in Seattle).
This story is also a bit suspect inasmuch as there were no connections whatsoever between Rory and The Band, whereas all the performers who were invited to play that night had some kind of link with them, however tenuous.
As for what it would have done for Rory's career, again I'm not sure. After all, it dumped Neil Diamond straight into the wilderness file, where he languished for the best part of 30 years.
It would have sounded proper, though, I'll grant you that, and Levon Helm and Garth Hudson would have laid down a richer, less manic backing than Rod de'Ath and Lou Martin. (Robbie Robertson might have had serious concerns about certain thunder-stealing issues, though - Rory's playing was at its absolute peak in 1975-76.)