A simple 2 word answer - dismember it. Containing it would be a short term solution. Which we have been half heartedly trying with obviously mixed results. I disagree with your contention of our reluctance to undertake covert operations in order not to attract the opprobrium that Pakistan does. We need to undertake such operations with enough distance to maintain plausible deniability. In case we aren't, a bit of wink & nudge by our allies may be in order.
We need to build up a case that a N armed Pakistan with a rogue PA is an inherently destabilizing entity not just for the neighborhood but for the general peace & security of the democratic world. This has to be hammered constantly into our western allies & Russia. The former needs to be made aware of the tendency of the Chinese to profit from this dissonance thereby affecting the security situation in the Far East.
The onus of construction & the selling of such a narrative and the solution vis s vis a break up of Pakistan into smaller Nations rests on us. I doubt whether we have ever given serious thought to this. In any event, if we haven't, we ought to.
Our aim should be clear cut. The de fanging of Pakistan and reconquest of PoK. This is essential as apart from being the virtual umbilical cord binding both iron brothers, it's this bit of real estate that's at the heart of the CPEC, China's energy security avoiding the Malacca dilemma and their access to the IOR.This is also Pakistan's gateway to the CAR & ours too should we choose to exercise this choice . Let me go further and second
@vstol Jockey 's view that having taken PoJ&K , we need to focus on the Wakhan & annex it too thus cutting off China's access to the CAR ( in a limited way) & the ME permanently.The Chinese need to know their sphere of influence is the Far East & the limits of their reach in their Western borders.
We don't need the population of Mirpuris in the so called AJK. The ones in GB can be retained if they aren't deemed to be a security threat.
The Chinese would, if we neglect to seize PoJ&K NOW, not otherwise. In addition to this, I would advocate taking territory in KPK - Pakistan flanking the Wakhan which would happen to be Swat, Hazara and Chitral too. This must serve as a bargaining chip, when we derecognise the Durand Line and encourage the Pashtuns to reunite promising them recognition if they recognize our taking over the Wakhan in exchange for Chitral.
If this results in the non Pashtuns of Afghanistan feeling insecure, let them. We can think in terms of a Northern Afghanistan, Southern Afghanistan and a Punjabistan as mutual antagonists. Suits our policy too.
I would keenly await your views on this vexed problem & it's solutions.