The general cannot decide on Kashmir without the agreement of the parliament. More to the 'good' general image. I dont really understand who is our man trying to fool? The west certainly, but any political observer of pakistan knows the amount of power the army wields. They can cobble together a solution if and only if they want to. The solution is pretty simple from the Pakistani side, accept the status quo with the LOC as border and hope that Indians give some concessions for free movement across border making Kashmir a kind of joint rule.
The solution is not really beneficial. It pays to keep the insurgency running so that Indian forces are tied up. The right wing cannot give up on the islamic population of the valley(much less the conversion of Hindu India as the Laskhkar woudl have us believe) and they need to play up the threat of Hindu India for funds from the oil rich Arab countries. Pakistan has no real economy to speak of and they would become an Afghanistan if their primary identity of being different from India is changed. Of course, we people are similar in many customs but the people are never the rulers in any state-are they?
The commie's never had a role in Pakistan and the liberals cant do much without their integrity being questioned. So, the army would play the key decision making role. With the infiltration of right wing propaganda in the army, the decision could well be towards indefinite continuation of the support od armed conflict against India.
PS: Of course the long running water dispute is a different angle to the whole argument and I am not considering that here.