The potential for political diplomacy was limited. The Russians were our allies and could not therefore be seen as impartial mediators to broker a deal. Would you have trusted Stalin?
The leaders of the Allied powers met at Potsdam, Germany, from July 17 to August 2, 1945, . . . to plan the final campaign against Japan. . . . Clement Attlee replaced Winston Churchill . . . The first declaration issued by the conferees was the "unconditional surrender" ultimatum presented to Japan on July 26. . . . On July 29 the Japanese cabinet decided to make no immediate comment on the ultimatum, but press reports of their decision indicated to Truman and the Joint Chiefs of Staff that they had "ignored" it. This note of defiance, which may actually have been unintended, led to the decision in Washington to use the bombs.
Japan was on its knees: it was effectively blocked by the USN, nothing came in, nothing went out. The Japanese cities were a pile of rubble.
Really? They still occupied huge swathes of Asia so although the USN
and allied Navies were indeed blockading the main land they were still undefeated in the field much the same as the German Army in WW1.
The Armistice in WW1 was a causus belli for WW2. Had Japan been forced into a
conditional surrender there would have been every possibility of the same outcome in Japan 20 years later.