You are living in a fools paradise. First, let's get your facts right. The Obama administration is the one which proposed the F-16 deal. Yes, Pakistan has previously asked for F-16s, but in this instance the offer directly came from the Obama administration. The Obama administration has even clarified this proposal to win or rather bribe the support of Pakistan in the failed war in Afghanistan. This is an established fact. The original subsidized Obama deal changed as soon as the congress stepped in. Therefore, expecting Pakistan to pay the entire sum is simply put garbage and atrocious.
Tricky situation? You make it sound like as if F-16 is the only fighter on the planet available to PAF. You need a reality check. Sooner or later the PAF is going to have replace its aging fleet. The induction argument doesn't hold at all. The PAF is going to have to deal with this fact anyway. Whether the PAF starts this process incrementally at this stage doesn't really matter.
Just because the Indians are in denial regarding the Russian option doesn't mean that this really is the case. Contrary to Indian disbelief, Pakistan has held talks with Russian counterparts. This has been confirmed by various credible sources. We don't know where the talks are at the moment, but we cannot rule out anything. Then, of course we have other Chinese alternatives which easily surpass the F-16. In other words, the F-16 is a highly sanction prone fighter with no dividends for the PAF. It made sense during the Cold War, but today it is a liability.
Pakistan isn't going to pay 700 million dollars for 8 F-16s and some spares. Pakistan has much much better options for that kind of money. This deal might be good for you, but for Pakistan it is not done. Pakistan has rightfully protested the change of the initial terms of conditions. The Americans can set all the conditions they like. We're not going to buy this aircraft without any subsidizing. Period. We can live without the F-16.