So what concessions would you have made to the Japanese?
They already tacitly understood (it had been communicated through "backchannels") that they could retain their Emperor (though he would have to renounce godhood).
So what else would you have conceded to them, to "sweeten the pot" and induce them to surrender?
The Japanese fascists were morally on a par with the Nazis - and we had demanded the unconditional surrender of Germany. For what possible reason should we have accorded Imperial Japan better conditions than Nazi Germany?!
Regards,
It's a question that could go back prior to their attack on PH. (Do we allow them any of their desired Greater East Asia Co-Prosperity Sphere, seeing their point about our grip over the Western Hemisphere with the Monroe Doctrine? I don't know.)
In other words, the guidance would have to have preceded our entry into the war; otherwise, you're handing me a schitt sandwich and laughing when I have no options.
The short answer is to fall back on the naval blockade. The US Pacific Fleet at war's end was the largest armada assembled in the history of the human race. We could have had warships doing donuts around those islands for years; there's no need for an invasion and we achieve our objective of a restrained Japan.
Put them in place and give the Japanese a phone number where we could be reached when they're tired.