Pakistan's approach to Kashmir is deeply flawed. There are two opposite ways in which a people can live. One is the republic approach in which the people have direct participation in the making of decisions and policies that effect their lives. That was the way of Greek city states and Roman republic. Here people are their own rulers. Other way is that of a king or emperor. The king makes all the decisions for the people. He rules them and he decides what will be done and what will be not. He is deciding how people will live and what goals they will strive for.
In today's governments its a mix of both. Governments make all the decisions for the people but those governments are made up of the representatives people themselves chose. It is different from republics of Greece and Rome where citizens themselves participated in the governance not through representatives. Today the central governments rule over a country but autonomy to provinces and states is also given. This way the people of a province can make their own decision free from the central government.
Now we come to the point of bringing freedom to a people. Freedom can only mean one thing. Changing the political organization of a people from a state where they were ruled by a king to a state where they made their own decisions. A region's freedom is only suppressed when the center makes all the decisions and policies for them and they dont have any self rule.
Kashmir's circumstances are similar to any Pakistani province. They come under the central government in Delhi which makes some decisions for them but they also have a degree of self autonomy. Their state government makes most of the decisions and policies for them. A Pakistani province e.g Sind is in a similar situation. It is ruled by Islamabad but they also rule themselves through their own provincial government. What good can Pakistan do by taking Kashmir. Freeing them from the rule of Delhi and bringing them under the rule of Islamabad? What good will it do them. Will Islamabad grant them greater self autonomy. The answer is no. In Pakistan the provinces have even lesser self autonomy than what Indian states enjoy. Delhi interferes less in the lives of Indian people than Islamabad interferes in the lives of Pakistani people. If Kashmir joins Pakistan power will be transferred from Srinagar to Islamabad. Kashmirs will have even lesser power.
If Islamabad reduces its power and transfers it to provinces so that Pakistani provinces become far more autonomous than Indian states, only then can Pakistan demand Kashmir.
To sum it all up. Kashmirs dont rule themselves completely, Delhi rules them. But with Pakistan it will be no different, Islamabad will rule them.