Plausibly? All across the islands, assuming they can organise themselves. A single coherent Wales isn't huge, but during a time of conflict that they are separate from, an intervention could be significant.
I prefer earlier PoD's for this, ideally somewhere involving Vortigen falling down a well unexpectedly head first in the night (seriously, who invites a huge army of foreign troops to police your people when they've accepted you, albeit tenuously, as their overlord? It isn't like you've got the Romans to learn from, or the Gauls. Or some semblance of common sense.)
A strong Powys uniting Wales earlier, with a marriage to Dumnonia could form the backbone of a 'Welsh' (more accurately Briton) state, rather than Saxon. If there can be a town in the Chepstow area, or a castle/fortress built by Beachley then that could be a good smallish capital. (Amusingly, it could be a Constantinople writ-small, as the Wye and the neck are both smaller than Constantinople and the Golden Horn. Either that or the town is Chepstow, with a good evacuation route to Beachley.
The advantage is that they are just off the Severn, which can benefit trade too and from the capital - and allows it to act as a natural barrier.
Another idea is to take advantage of 1066. Norway in the North, Normans in the south - the Welsh could intervene on the side of Harald Hardrada against the Saxons, and then let the Vikings and Saxons fight off the Normans - and take advantage of the chaos. Sure that isn't an instant conquest of England, but using it as a chance to take the Liverpool/Manchester Area, and the southwest (and maybe southeast, depends how events unfold) puts the Welsh in a powerful position.
Perhaps Rhodri the Great survives the battle of Anglesey, and sets up a single successor in Wales, wrangling his other sons to stay loyal. I wonder if the Welsh would benefit from mimicking Viking and Irish raiders, and have his remaining sons raid overseas, taking land for themselves, and sending gold back as tribute. A united Wales up to the Severn could easily do this - consolidate, and butteflies permitting, a 1066, or similar scenario takes place and the Welsh intervene.
