Dear Metalfalcon, You have correctly put it. There is more need for people to people contact to understand each other better. 60 years ago, we were a single nation, who fought together for freedom. But then again the Butterfly effect can not be wish away. If only Jinnah was offered the Prime Ministership, this whole mess and bloodshed from partition till date and god knows till when
could have been avoided. But bygone be bygone
But I would like to put across my views against some of the points raised by you.
History is usually written by the victors.
We have Indian History and Pakistani history, adapted to suite the respective nation. Fortunately for us, our school children read about the Pre-Moghul Hindu period, the Moghul Period and the British period. Jinah is given proper place in Indian history textbook, so is Khan Abdul Gafar Khan the frontier Gandhi. Khilafat movement is given equal importance as satyaghara movement in Indian school textbooks.
Thankfully, I was fortunate enough to read History written by third party Neutral writers. I recognize and accept that Indian policies too have not been always that saintly.
Let me start off with your comments Regarding Issue of China, I would like to tell you that Pakistan and India were enemies even before the creation of China ~ Isnt is unfortunate that you have used the word ENEMY here? I am not willing to recognize Pakistan as my countrys enemy. A race to consolidate territories during our formative years let to a war in 1947 and till date we are carrying the burden, through numerous conflicts
60 years down the line, the borders stands almost where it was in 1947.
Regarding Issue of China, I would like to tell you that Pakistan and India were enemies even before the creation of China and Pak-China relations and your comment about China that they are using Pakistan as a diversion for India.... well i will disagree with you on this point China doesn't need help on anybody in order to deal with her challenges on the contrary Pakistan needs China to counter India. China on the other hand is trying to Brooke peace between India and Pakistan. It will be wrong if a say Russia used India to counter China isn't it.
Well, you may not agree but, let me elaborate a little, and may be this might trigger reevaluation of your position. Nations dont have permanent friends or enemies, but permanent interests. Its all give and take. You have received valuable technological support in Nuclear and Missile Technologies. What have the Chinese received in returns? Money? Aksai Chin ? My friend, China needs you more than you need China. Dont short sell yourself  Challenges as mentioned by you are not always military
US has been the Global Cop  since the demise of USSR. China tried a trial run last month. And I do not blame them for that. China will be a super power by 2020 and it will come with its perks, responsibilities and vices. It will be wrong if a say Russia used India to counter China isn't it. Not really. I agree with you that USSR needed India by their side, first to counter China and second to Counter US, but we did not short sell though 
I would like to thank you for accepting that India is a country of equal opportunity. Like many Hindus, Many Muslims, Sikh, Parsis, Jews and Christians have rose to high prominence. But unfortunately, we also have seen communal clashes. Gujrat was extremely unfortunate. But, your perception that Muslims in India are persecuted based on their religion is not correct. We must appreciate that when 1.2 billion people who has equal right to the nation and its resources and services has go around living and compete for the same, there are bound to be clashes. Now 20% of our population is Muslims. Is there a way to avoid clashes within muslims or within muslims and hindus? Or within hindus? Impossible. Add to that a dash of rightwing politicians, both in Hindus and Muslims. What do you get??? Now add to that Aaj Tak, ( your favourate News Channel 
what happens? So news, which gets more TRP is telecast with repeat footage, over and over again. My friend, Muslims in India go about their business as a Hindu or a Christian, facing the same challenges. All muslim mosques are protected ( Babari, one in a million mosque in India, we can discuss separately ). You will be surprised to know that in India, Muslims have their separate personal laws, as per Islamic Practices. Even Pakistan, being an Islamic nation does not have the same. Your perception that Muslims are persecuted in India needs to be validated after proper study. Not to score brownie points, but just for the records, more muslims are killed by muslims in Pakistan than Muslims killed in India. Even though Indias population is five times Pakistan.
Mumbai attack. Hope Pakistan will investigate the issue based on Indian claims and evidences and the evidences of other countries, that may be available. Everyone knows, that more people are killed by terrorist violence in Pakistan itself than in India. If the evidences provided by various governments and intelligence services point to some persons, whether state or non state, it would be prudent to take actions against them. Not for Indias sake, but for the sake of Pakistan.
One wrong notion, that seems to come across is that the Indian Military can order the civilian government, in India. This is far from true. You may not be able to appreciate the same, with your own experience as bench mark. But yes, The civilian government will consult professionals from time to time. And it will consult with the Military when the issue is national security. The Military can only advice the government but not ask/order. But of course, there is no solution to Kashmir, if territorial changes will be involved. Neither an Indian nor a Pakistani government can take a stand. The only pragmatic solution is to convert LOC into International Border. But even to agree to this ( only solution ) it will take strong leadership on both sides.
But coming back to my original post, where I emphasized that Strategic Depth is responsible, in military terms, The Mumbai attacks would have solved a host of Pakistan armys problems, had had India responded with military aggression or at least as it did in 2001 a military build up.
How is it?
This is how I look at this.
First it would have brought all infighting amongst the Islamist fractions within Pakistan, which was sapping the Army in terms of man and material as well as moral to a halt and united the nation together.
Second It would have allowed the military enough reason the abandon the western front, forcing the NATO forces to the mercy of the Taliban. The logistical lines of NATO would have been cut off immediately by the militia, forcing NATO to exist or to maintain a token presence, while Pro Pakistan Taliban takes control of Afganistan.
This would have work as a hedge to Obamas stated policy vis-à-vis Pakistan, while giving back enough bargaining power back to the Pakistani Army. Hence in my original post, I had indicated that India should prepare for another horrible attack, like Mumbai, , or a serious provocation overtly the Pakistani Army or its instruments, before Feb 2009
For a nation there are no permanent friends or enemies, only permanent interests.
I look forward to your views and arguements