Well considering that it was numerous countries who were involved as well its hard to imagine how this will go down in a way that's positive for China.
The countries involved were CANZUK, the US, France, Germany, the Netherlands and Norway. In this matter its not viable for the UK to hand over the students as the others involved would object and it would basically be political suicide for Thatcher and the Conservatives, doubt any party would support handing over the students as that's a anti-democracy stance that would boil down to handing students over for execution.
I think it would boil down to the UK with Allies calling China's bluff, though if they do go forward with an invasion then it either leads to China being scorned with sanctions which would delay China's integration into the world market by quite a few years and the stigma of tianaman enduring much longer or, less likely war which I imagine would mostly boil down to a naval war, some air strikes and supporting Taiwan as nobody will want to try invading mainland China.
