Regardless of everything going on, the sanctions, the potential war crimes, ultimately there needs to be a peace. The sooner we can find an 'out' for Putin, the better for all involved, particularly the average Ukrainian. Pushing him further into a further is going to make things a lot worse.
I suspect he'll want the two regions the separatists have been fighting over, not because they're Russian, but because they provide a land route to Crimea. The Ukrainian army aren't strong enough to kick Russia out of there now, so unless NATO is planning on doing it, which would be a huge escalation, they may offer Putin the 'win' he'll want to claim whilst minimising the death and destruction that will happen from now. I suspect he's realised the Ukrainians don't see him as the saviour he thinks of himself as, so unless he wants another Afghanistan, the sooner he can get out the better for him domestically.
Europe then needs to concentrate on bringing Ukraine into the EU and closer to Europe but maybe turn down the joining NATO bit. Invading an EU country in the future world probably be a line too far, but then not being in NATO removes part of his paranoia, or at least the part of it he can spew on state TV. Let him claim his victories whilst the rest of us get back to international trade and finding an alternative gas supplier.