AIG issued credit default swaps to insure securities issued by investment banks owned by commercial banks. With Glass-Steagall in place, investment banks would have lacked the leverage to do what they did to the level they did. In short, there's no need to speculate how hard the market still would have been hit with Glass-Steagall, because the scenario that played out simply wouldn't have played out.
AIG only insured investment banks owned by commercial banks? They insured investment banks which had at the time no connection to commercial banks.
And if Bank of America didn't buy Countrywide and Merill Lynch and JP Chase Morgan didn't buy Bear-Stearns they probably wouldn't have needed TARP funds and would have weathered the problems on their own without government help.