Option 1 has been tried, ineffectually for 9 months.
Option 2 is is what the US should be doing to wipe out the vermin. OPtion 3 is for India to conduct its own campaign; its called WAR, incursions to another country's territory without their consent.
Well, nuclear blackmail is a recipe for inertia. We'll see what happens. Of course, India, historically is all bark and no bite. Take out the terrorist camps in Kashmir; if the nuclear jihadis escalate, its a risk India has to take. Do you think there's any difference between the taliban, alqaeda, LeT, JeM - they've all been spawned by the ISI and financed by the Saudis.
Pakistan did give us permission to use their airspace for the war in Ashcanistan, and that went a long way in the US government's relationship with Musharraf. And that is probably why we have not leaned on him harder. But that can only go so far. With the US delegations going over there, he know he is going to have to produce results in combatting these terrorists. But remember, Pakistan is a sovereign nation with a legitimate head of state (at least he is being treated that way). I think he should be given a chance to change his tune. Then let India decide if his efforts are adequate. But if there is a major terrorist attack in India, then all bets are off.
If war is what you want, then be prepared for the consequences. Conducting a "limited war" in this region in this situation now is going to be darn near impossible. I just dont like the idea for parts of SE asia becoming quiet neighborhoods for the next 2500 years.
You are right about there being no difference between terrorist groups. I figure we need regime changes in Iraq, Iran and Saudi Arabia. Drain those swamps and see what happens.