There is meaning to what you say. Even at this stage; the Army (or Security Estt.) can and must "bite the bullet" and work on this serious threat within. The past can (and must) be steadily and progressively broken with; since the past itself is creating the Ghosts that haunt today.
As for the LOC; it is a reality, even for the entire world. Therefore it is the de-facto common Border. Even the Heavens cannot change that in any major fashion.
You see the problem lies in the fact that the Zia doctrine is alive and kicking in the PA. 'Bleeding India with a thousand cuts' is their signature tune especially after the 1971 war.
Retribution for the loss is foremost in the psyche of the PA. They need to hurt India to get even. So any attempt at a detente is going to be a non-starter - unless of course there is a paradigm shift in thinking.
The second side of the triangle is the insecurity of the PA. They seem to be paranoid about being enveloped by India in the East, and Afghanistan supported by India in the West and therefore are propping up the Taliban (Haqqani) to take over the helm after American troops withdraw. For this they have been supping with the devil for the past 10 years, playing a game of running with the hare and hunting with the hounds. The Americans know this but are caught in a cleft stick, as without Pakistan the cost of the WOT in Afghanistan would become prohibitive.
If the Pakistan Establishment hadn't helped and supported the Taliban all these years, the game would have been over in Afghanistan long ago.
This has resulted in drone attacks that have killed hundreds of terrorists but resulted in collateral damage too which in turn has given birth to the TTP which has been responsible for the massive casualties of Pakistanis - more than 50,000 soldiers and civilians killed and many more wounded. This has also given birth to a number of militant groups, all jostling for space.
The Establishment's support to terrorist groups to fight their wars against India by proxy has started getting out of control with splinter groups charting their own course by getting help of groups inimical to Pakistan's interests. This melds into the third side of the triangle which is:
The need of the PA to keep the Indian 'threat' alive, without which the very raison d'etre of the PA would be at stake. Otherwise they would be sidelined and lose their credibility and importance in Pakistan. So they need an enemy to keep up the charade, which needless to say is India.
At the center of this triangle are the vested interests that need to keep Indo-Pak hostilities going and the pot boiling. An example is the JuD that collects millions of rupees from the sheeple based on their anti-India tirades, without which contributions would dry up. They need a reason, which is the 'liberation of Kashmir'. A very convenient motive as this dispute could last for decades resulting in a steady flow of funds well into the future.
So, as you mentioned it's not just the conversion of the LoC that would sort out the Indo-Pak imbroglio. There are wheels within wheels - the malaise is too deep rooted - almost impossible to extricate from.
And needless to say, India must tone down its anti-Pakistan rhetoric.
The road to peace is going to be long and arduous.