I did not read your justification for the President to give an award to a failed and captured warrior. We can defend his eagerness and his ferocity, however, he did lose and was captured which does not merit a medal of the highest order. Anyway.
Coming to your second point, it makes absolutely no sense for IAF and India to back down and NOT respond to Pakistani aggression through PAF the very next day. Had IAF indeed shot down any F-16, let alone any neutral count or confirmation, the IAF and India would have gone on the offensive and would have escalated the Air Battles to try and take out even more PAF Jets.
The only logical conclusion, the only reason IAF backed down and did not even dare respond to PAF's attacks on Indian Occupied Land was the fact that PAF had not only come out on top through better communications and electronic warfare systems but had also made the top of line IAF jets, the SU-30MKI, virtually useless and at the mercy of PAF BVRs which not only outranged the IAF but also shot down the pride of IAF, an SU-30MKI.
This is further confirmed by the speech of your PM in which he rues and regrets the non-availability of Rafale, and how the result could have been different