On the other hand, I still think that there is an argument that we might have - after some initial battles - agreed to let Japan keep what it had prior to the war rather than seek unconditional surrender.
I don't really understand the argument, particularly. The counterarguments I saw spoken of beforehand, pointing to Vietnam and 1812, don't really make sense to me. The War of 1812 took place over a period of three years between a US with virtually no military against one of the major powers of the Napoleonic Wars - and even then, it still took three years to approach anything approximating status quo ante bellum. Vietnam took place over a decade in a small Asian nation that was not expanding and taking over half of Asia in the process - and it didn't help that it was the first war that really made it into the homes of Americans, which did eventually turn the hearts and minds against it. The three different conflicts aren't in parallel.
The US
knew the Japanese were attempting to conquer all of China, and eventually all of Asia. They
had committed atrocities upon the Chinese in spades - these were not isolated events. And Japan couldn't stop them, as the militarists were in power. A naked attack on the British, Dutch, and other nations of Southeast Asia is a blatant expansionist attack on two powers the US is aligned with (supplying with Lend-Lease material, for a start), and that's regardless of the propaganda that the Japanese espoused. The Japanese have shown their hands and committed their fleets and armies to the wholesale conquest of the Pacific a region of major US interest (This would be like, say, Germany trying to conquer the Caribbean, roughly). There are no gains to be kept post-war.
It's likely that the US will
accelerate rearmament plans. Some of the
Independence class conversions are likely to be skipped or pushed back, but the US will have an ever expanding fleet that is being built for the purpose of defeating the Japanese. 32
Essex, and eventually 6
Midway, class carriers are on the way, and they'll start entering the theater by 1943, at which point Japan has quite literally no chance to win. This is a nation that only ranks above
Italy in total capacity for warmaking, after all - they don't really stand a chance once the US gets under way.
So, to assume that the Americans will sue for, or accept, status quo ante, when the status quo ante was enough to propel them to the point to construct the fleets and gather the armies in the first place, seems like Japanese wishful thinking (indeed, it was hoped OTL that a few swift defeats would be enough to bring the US to the bargaining table). However, the US has nothing to gain by letting the Japanese run rampant across Asia, and isn't going to declare war on a whim - they'll declare war to drive the Japanese from Southeast Asia, and likely from China, and will accept nothing less than that. The exact definitions might differ, of course (Formosa wasn't claimed by China until late 1945), but the sum total of the conquests will be rolled back in order to have the US withdraw.
One does not pick up the sword unless they are quite willing to see it through to its bloody conclusion, and the Japanese had driven the Americans further and further towards unsheathing it with only the provocations in China and Indochina. Further conquests afield are only going to alarm the US more.