Let's analyse the situation using the actual, dictionary meaning of the words you've so effortlessly used.
1. Logic: Logic dictates that the stronger party dictates or dominates the proceedings of any negotiation and seek more benefits/advntages, unless he/it chooses to waive off his advantage. Please explain why would India, the stronger party in this case, even take part or allow a negotiation where she would be on the losing side.
2. Compromise:(an agreement or settlement of a dispute that is reached by each side making concessions) It appears the Pakistani definition of compromise is that India will give up territory, strategic advantage without Pakistan making any compromise. Sorry, not going to happen.
It's also well implied that in a negotiation, the weaker party generally accepts more compromise, or at the very most, both sides make equal compromise. So please explain why the evil Baniyas would be the compromising party?
3. Common Sense: So you're telling us that India, which cannot be militarily defeated by Pak, which could absorb 25 years of a major insurgency in Kashmir without any significant loss, which is 10 times the size of Pakistan economically, and which holds the said territory would simply surrender and retreat and hand it over to Pakistan, and that would be common sense for India?
I understand that you believe we are idiots, mentally retarded, but even that wouldn't be enough for us to simply surrender to a weaker nation.
First learn and understand the ground realities before coming up with your "most reasonable compromise". They sound more fiction than fiction itself. India is not going to enter into any negotiation about giving up its held territory. Infact, India isn't going to enter into any negotiation at all until there is something in it for us.
The people at the helm of India are no longer the pre-independence generation. There is no sympathy, no yearning for good relationship with Pakistan. Pakistan and any disputes concerning Pak will be negotiated according to cold logic and ground realities.