I genuinely think that it was quite implausible that Indonesian military will openly confront INTERFET forces at that time. Any Indonesian military top brass with half a brain will realize that there was no way Indonesia could stand Australian retaliation as the military at that time was totally in shambles, perhaps even more than the economy as the United States imposed arms embargo to Indonesian from 1999 to 2006.
Indonesian military has done many things that people could considered as evil, but believe me, they're not stupid or crazy.
EDIT: that being said, I still find the idea of East Timor crisis escalated into F-111s bombed Jakarta to be very interesting (in the Chinese sense, of course
)
Let say that some top brass was crazy enough to pull an attack on one of INTERFET's troop ship and Australia really retaliated by bombing Jakarta.
Welp, the most obvious immediate effect would be into the economy. Open conflict with Australia will certainly worsen the already in shambles economy. Even if Australia only targeted military infrastructures, the conflict will make the whole thing even more unstable.
The political effect, I'm not quite sure about it. Indonesia was at its early staged of democratic reform at this point, after almost 32 years of autocratic rule by Suharto. As Indonesians generally were, and are very nationalistic, Bombing of Jakarta could whipped the population into nationalist frenzy and undone the democratization process, basically killing it on its crib......or it could discredited the old regime even further as the populace could see that the remains of the old regime dragged them into a pointless conflict (I say pointless because there's no way Indonesia would win in this one, so no "victory to distract the populace") instead of attempting to feed them.