RE: During WW1 the Austro-...

Not sure at all, but it might be a modification of Walsche/Welsche, which is still a derogatory term for Italians used by German speakers in the South Tyrol area - in opposition to true Germans (Walser) and Slavs (Windisch).

Sometimes the term is neutral, as in the place name Welschnofen, in South Tyrol. (These are from Wikipedia, I made a search with Walsche in the Italian section, and it does make sense).

The word ending with -er should be plural. It's very hard to convey its meaning in any other language, I am afraid.

...Hungarian derogatory nickname for Italians - the Habsburg Empire's official allies until 1915, at which time Rome decided to switch sides - was "Wellischer".

Is this the plural form?

Does it have a meaning in English?

The Polish word for Italy is Włochy. I typed in a search for Włochy Welsh walnut, and lo and behold...

This may help.
More here.
More here.

Edited by: chriskean1

"The Polish word for Italy is Włochy. I typed in a search for Włochy Welsh walnut"

It looks like those three words can be traced back to the same root.
Walnut in Polish is "orzech włoski" (Italian nut).

In addition, a gelding (castrated horse) in Polish is "wałach", also from the same root. The method or custom of gelding horses was probably brought to Poland from Valachia.

Thank you all.

Very welcome.