I'm inclined to wait for the ICJ's verdict before I pass my own. As far as KJ's own status goes, the man is undoubtedly a spy, although one might say that the state is pinning too much on him, the fact remains that he was not here to distribute sweets to orphans. There was some sinister motive involved and I do believe that if we simply allow him to return to India, it will further embolden India to engage in destabilizing Pakistan knowing that it can simply turn to the international community if any of its non-burnable assets are captured.
From an Indian perspective however, it makes sense to get their man back and of course I hold nothing against them for doing that. Similarly, I hold nothing against CDR Jhadav, he was just performing his duty. But as men in security, we know that we intentionally put ourselves in harm's way to get these things done, we know that things can go south as they did with Jhadav and we must be ready to bear with that.
As far as the question of bilateral relations goes, they have already deteriorated to the point that there is now no "carrot and stick policy" to be pursued there. There are hardly any working peace initiatives, our water is already being leached and in the monsoons we'll be flooded like every year, we have the lowest regional trade of any region, patients are being refused treatment in India unless they get a recommendation from the PM's Special Advisor on Foreign Affairs. There's essentially nothing left in terms of bilateral relations to be worried about.