Tom Hiddleston's Loki is one of the few villains in the MCU fortunate enough to be graced with a long-form character arc, but there's a question of how that might have turned out had he been banished to Earth instead of Thor. Marvel already introduced its own What If...? series to the world. Reception to it was generally lukewarm, if only because a large number of the ideas weren't as fully fleshed-out as they might have been. Many of its ideas were minor tweaks to the movie continuities that, in theory, should have had a far-reaching impact on What If...?'s MCU, only to show minor and immediate ripples as opposed to major ones.
Having been among the most popular characters in the MCU almost since his inception, Loki avoided a great deal of the criticism generally foisted upon most MCU villains. It was this popularity that allowed the filmmakers to do more with his character than many others, ultimately giving him his own series. Odin may have been all-seeing, but his foresight was an absolute problem when it came to the upbringing of his sons. However, there's a legitimate question as to how things might have turned out for the God of Mischief if Odin had caught on to his scheming sooner.
If Odin had been able to determine Loki's dark machinations and plan prior to the true inciting incident of 2011's Thor and banished him instead of his brother, what might have happened? His character arc would be unrecognizable. Being so integral to so much of the MCU, it's a safe bet to say that the entire arc of the first three phases would be radically different. Being as crafty as he is, however, there is reason to believe Loki would have found alternative means of regaining his abilities, despite Odin.
Loki Almost Certainly Wouldn't Learn His Lesson
On paper, Odin's reasoning for banishing Loki would likely have been the same. Had Loki shown his hand just a bit too early, Odin would have seen the extent of his arrogance. Thor was banished because his ego was eclipsing his judgment and making him behave in a brash, destructive manner. The difference between the brothers was in how Odin's parenting failed Loki and Thor each. Where Thor was spoiled rotten, Loki's ego was born of insecurity, which itself was a product of Odin's neglect of him and the envy he felt toward his brother due to always being in his shadow.
Identifying the root of the problem would have been key to the punishment. Had Odin banished Loki upon learning the truth, Loki's own resentment may have exploded, rather than receded. Being banished while seeing that his brother managed to evade punishment would more likely have exacerbated the issue by fueling Loki's feelings of jealousy toward Thor and his hatred for Odin for never showing him the affection he'd been craving since he was a boy. With Loki's resentment toward Odin reinforced by this banishment, he may not have bothered with self-reflection or, if he had, he may have decided not to take whatever proverbial olive branch Odin decided to extend to give him his pathway back to Asgard, as was the case with Thor and Mjolnir.
The Avengers Would Take Longer To Assemble
If Loki had been banished to Earth prior to the main events of Thor, then there would have been no cause for the God of Thunder to come to Earth, save for a visit to check on his brother. Without Loki's powers, however, he almost certainly couldn't cause enough trouble to warrant Thor sticking around. Under these circumstances, SHIELD monitoring Thor's hammer Mjölnir wouldn't have happened. As a result, the bulk of what takes place in Thor simply wouldn't have gone down in this scenario.
Without Loki being around to cause his mischief, the Avengers would have taken far longer to assemble, and the roster would have had one notable Asgardian vacancy. Loki wouldn't have been present to cause the events in New Mexico. Nor would he be able to slip away into the cosmos and team up with Thanos to conquer Earth and seize its Infinity Stones. Without that collaboration, the entire plot of the first Avengers film would have been different. Without them already being together, the events of Age of Ultron wouldn't occur as Tony and Bruce wouldn’t have made Ultron, meaning that without significant changes, the Avengers wouldn't have an enemy major enough to assemble against until Avengers: Infinity War. And by then it would absolutely be too late to do much of anything, especially with reduced firepower as Thor probably wouldn't be around.
Loki Could Have Regained His Powers As Sorcerer Supreme
Perhaps the most intriguing possibility, however, would lie in how Loki would have managed to get his abilities back. It's stated on more than one occasion that Loki's skills aren't necessarily innate to him, though his magic is. He relies mostly on Asgardian magic he originally learned from his mother and expanded his knowledge of, though he was born with some innate Frost Giant powers and magical aptitude. Presumably, only his physical ability is inherently above human, and even that is evidently not up to par with most other Asgardian warriors like Thor or Lady Sif. Loki, without his illusion magic (and the Mind Stone), could barely defeat Captain America in The Avengers. However, if Loki had his magic stripped away by Odin, a being as crafty as the God of Mischief could have sought alternative means to get it back, leading him to the discovery of Kamar-Taj and the Ancient One, potentially years before Steven Strange ever made that journey.
It wouldn't be much of a stretch to say that Loki could take this path. Doctor Strange made it clear that the Ancient One was willing to train Strange despite his ego and ambition, seeing his potential. In fact, the Ancient One may have seen Loki's preexisting talent for magic and been more inclined to train Loki as he could have found her far sooner than Strange did, and thus found her before the betrayal of Kaecilius made her wary of those particular traits. While Loki would have proved nothing if not ambitious and egocentric, his unique nature as an Asgardian could quite possibly have piqued the Ancient One's interest as well, seeing the potential to make him into perhaps a more powerful Sorcerer Supreme than Steven Strange proved to be through her peering into alternate timelines.
The question would come down to whether or not this would actually have turned out to be a positive thing. There's nothing, after all, that says a Sorcerer Supreme must be benign. In the comics, Doctor Doom is a regular Sorcerer Supreme contender and magical rival to Doctor Strange. Unfortunately, without the years of positive character development under his belt from the likes of the Thor movies, Loki regaining his powers and then some would end badly, more likely than not. Worse, a potentially evil Sorcerer Supreme would be a threat that the MCU may well have been unprepared for as Doctor Strange in the Multiverse of Madness made rather clear. Loki may have revealed himself in time to aid with the Thanos problem, only to immediately turn on the Avengers in an ego-driven bid to conquer Earth before turning his ire back to Asgard, where Thor would have certainly been ill-equipped to stop him. In the end, Loki shaped so much of the MCU, that a shift for even his character, alone, would have made for some pretty sizeable ripples.
