If F-16s were actually good enough to handle Rafales, then there is no need/reason for PAF to order J-10Cs. The reality is that the F-16s are not good enough. And yes, JF-17 block 3s are at least as capable in air defense/interception role as the MLU'd F-16s if not the block 50/52. The different in missile/electronic technology between what US produced in early 2000s and what China has now is quite vast. If you think about the cost of maintaining a new aircraft, introducing J-10C is not the cheaper option for PAF. It's the expensive option. Now that PAF has made a commitment for J-10C, I'd be surprised that they stop at 25. A force of 250 JF-17s and 60 J-10s by the end of this decade would be a huge lift in PAF capabilities. No reason to keep Mirages or F-7s in the fleet anymore.
I also think people need to be realistic about Pakistan's aerospace industry. Russia, with its long vast history in military aviation, is having trouble putting Su-57 in production. Mikoyan, with its long history, is having trouble putting a respectable Mig-35 into service. Building a modern military aviation industry is a long endeavor. One that Japan has already failed in. One that SK is struggling in getting into. These are things that I'm sure people in charge of PAF understands. Investing in domestic aerospace industry is a worthy endeavor, but not one that should take funding away from more pressing need in the Air Force itself.