Recent reading on the subject as indicated that the British government, even Churchill, were not opposed to negotiations. I realize that it is a common thread, but I hoped to avoid the cliched answers and find someone that might be more educated on British politics and able to answer the question in a more analytical way than the usual "Well they didn't negotiate IOTL, why would they ITTL".
As usual there is a lot of nuance and most posters are caught on the propaganda-based history like 'It was their finest hour' and British solidarity, when even during Chamberlain's administration Churchill was recorded as having suggested acceptable terms. This suggests that he wasn't a serious about not negotiating as propaganda-based histories suggest and most of the answers I've gotten and ever seen given on a question like this are based.
http://www.amazon.com/1940-Myth-Reality-Clive-Ponting/dp/1566630363
Clive Ponting discusses this in less depth than I'd like, though he does source his claims. He also shows that Halifax and Churchill were of the same mind until Churchill replaced Chamberlin and decided to break off peace talk until after Sealion had failed to bargain from strength. By the time that Sealion was official canceled (1941) and the LW had been defeated in the Battle of Britain, Churchill felt that Britain could hold out because the German attacks, though painful, were little more than a nuisance and Britain could wait for either the US or the USSR to enter the war and take the offensive to the Germans, because Britain alone could survive indefinitely with German attacks as ineffective as they were.
Obviously this hinges on Churchill having the view that the German threat to Britain was not great enough to consider terms. I've never seen the question properly answered as to what would convince Churchill or his government to consider terms, so I thought I'd ask again, hoping for someone with a better answer.
Perhaps you're right that it was a newbie move to expect an educated answer beyond posters repeating the tired cliches they've seen older posters post in these types of threads, but there are very educated people on this board and I hoped that one of them might be able to post information that goes deeper into the issue and explores more than the white-washing that figures like Churchill got after the war to make them look more stoic and principled than they really were.
That would be a more insightful and thought provoking opening post than what you started with.
You started with this:
"What would it take for Britain to negotiate and accept an unfavorable peace that still left the Empire mostly intact and Britain independent from Nazi domination?
Would the failure of the Dunkirk evacuation be enough?
Would a sustained, effective blockade be enough?
Would the RAF being driven out of Southern England in the Battle of Britain be enough?
Would it have to come to a land invasion to bring Britain to the table?
This is a lot different from discussing the news that Churchill mentioned making an acceptable peace before coming Prime Minister. Perhaps you could have elaborated on what Churchill meant by acceptable and then it would have been a good start for a debate.
By making the original post you just reopened the old debates about changing the Battle of Britain tactics, different use of bombers and a more effective U boat blockade.
All that produces is the same answers as always and the thread makes a small circle.