Suppose that Leyte Gulf was a more complete catastrophe for the Japanese. The only ships to escape are a handful of destroyers, 2 or 3 cruisers, and Yamato. The sheer shock of this debacle allows the most fanatical of Japan's government to be overthrown, with the Emperor stepping in. The result: Peace is deemed acceptable if there can be some small face-saving measures, and the following offere is sent through neutral channels to the Allies:
Japan will surrender with the following conditions:
The Emperor is inviolate, and will retain his throne.
All Japanese forces withdraw to the Home Islands. They may bring their light equipment (machine guns, rifles, and grenades) but not heavy equipment such as artillery and trucks...basically, what each soldier can carry.
The Japanese Navy will be reduced to 1 battleship, 6 cruisers, and 20 destroyers, and NO submarines...just enough to save face and say "We still have a navy."
The army will be similarly reduced. Excess equipment to be scrapped or turned over to the Allies.
Japanese air forces (including naval air arm )to be limited to 100 combat planes.
The Allies to have full rights to search the Home Islands to enforce the terms of the treaty. (This will mean, initially, an army of ocupation at first, drawing down as circumstances permit.
Permanent US bases in several locations, chosen by the USA.
The Japanese negotiators are cagey enough to suggest that Japan is strongly anti-communist. Forthermore, excess Japanese gear in China could be left to Nationalist forces.
Behind the scenes, it's mentioned that public war crimes trials would threaten stability...but if the ones to be tried were given the opportunity to commit Sepuku (and so urged by the emperor) then the issue could be semi-avoided.
So---any chance of the Allies accepting this? If not, what might be accepted to allow some saving of face in return for an end to hostilities without an invasion?