I avoid specifically discussing the AIB share price as that is verbotten but consider the following example.
Current market cap of XYZ 10
Actual assets less liabilities somewhere between -5 and + 25, nobody really knows, So XYZ could be potentially worthless, or could be worth 250% of its current market cap.
After government puts 100 into XYZ the situation is as follows:
Market Cap 110
Assets less liabilities somewhere between 95 and 135
Therefore true value of original 10 is somewhere between 8.6 (95/110 x 10) and 12.3.
Thus the result of the dilution is to give a huge underpin to the price but at the same time greatly reduce its upside potential, and yes it becomes a very long term but safe-ish play.