I fear you may be right. India may have to take matters into its own hands and pre-emptively eradicate the Pakistani nuclear arsenal. They will likely want our help with some technical aid to make it possible.
Meanwhile China is clearly sitting back prettily hoping that both Pakistan and India annhilate themselves...leaving China sole power in the region.
Umm,consider this scenario
.An all out conventional war which starts on the pre-text of grave terrorist attacks on India-both sides slug it out for about 15 days & If India plays its cards right-it will have gained territory in Kashmir,Sindh & portions of the Punjab,in adddition to control of Pakistan's SeaLanes.Before such a war goes nuclear Beijing will mobilise it's troops on India's borders to upset India's applecart.Even if China doesn't go to war with INdia,it will not allow Pakistan to sink without a fight.If it means keeping the regime alive in Islamabad by using its diplomatic clout,so be it.Pakistan has been China's insurance policy for nearly 50 years now against India.
In the event of a seminal clash with Pakistan,India will emerge stronger in the long-term,but it would be wounded in the short-term.Trust Beijing to use the likes of Bangladesh or Myanmaar to rub salt.