I have observed myself the little damage inflicted on the Yugoslav military (at least in the South Kossovo region). But at the same time I observed the vast damage in infrastructure, together with the high emotion of the albanian-speaking population and the determination of some of them to carry on the struggle, thus making the life of the Serbs in the region much perilous. At the same time I guess that the Milosevic regime was not that beloved; combine that with all the trouble of the Serbian population and the destruction of infrastructure, such as bridges, roads and railways, power plants etc, it's easy to see why Milosevic chose to give in.
Most of it though, I believe it was his own preservation. He feared that if he continued his stance, he would be overthrown and even arrested and put in trial for his actions in Yugoslavia since 1991. And I guess he was right!
Honestly I can't see something different than OTL. If Milosevic persisted the NATO would keep on bombing for some more months. I don't believe they would try something on the ground, though, not only for the military jeopardy of such an effort, but also because they' d have to launch such an operation from Albania, which would complicate things a lot for the Balkan affairs in general.