I am willing to wager both my testicles that if Pak accepts LoC as IB, India will grab that with both hands any day of the week and thrice on Sunday, whether or not the alphabet soup of militant groups, operating from inside Pak, is 'tackled'.
If the LOC gets converted into the IB, or if AJK unites with J&K & forms an independent Kashmiri nation; in both scenarios, the militancy in the region will stop. The first method might not be as smooth as the second one, but over time, the support for Kashmir nationalism will diminish, when more & more people will accept their fate, & the Islamists will be marginalized. The second scenario will be a win-win for everyone in the short-run, including the Kashmiri people. But it might not be stable for the region in the long run, threatened not from Islamists, but from Pakistan & India using Kashmir as proxy land.