Speaking as one of the people who initially speculated this course of action, I would say peace can only be offered, not negotiated. Even if Churchill was not in charge, once the panic subsides, I really can't see there being any complex terms that both sides would find acceptable. The trust level on the British side is effectively nil, and despite the Hess adventure, I have to think the German government is not going to be in the mood to offer sweeping concessions straight after their dramatic victory against France. This is not auspicious for negotiations.
Consequently the only way out of this I can see is if Germany intentionally and from the outset draws a very hard and clear line at the English Channel, does not take the Channel Islands, and explicitly says, "Look, this is the new border: the ocean. We are a land power and we now have the land. Britain, it is up to you to accept this new border or not to accept it, but take it or leave it, we are done fighting. As far as we are concerned, this is now over." And then it is simply a matter of waiting until the British government accepts that reality.
Not a risk-free scenario by any means, nor, I would point out, is it the sort of diplomatic alternative that the Nazi leadership is likely to see as remotely feasible. But Glenn is attempting to maneuver us here into the same position as every other thread where I have read his work, which is that Barbarossa was clearly impossible and therefore Sea Lion should have been considered. Well, Sea Lion is impossible too. That leaves my route, because at least it isn't impossible, merely unlikely.