From my perspective, a lot of the current heat was from them attacking us despite the NAP (it was viewed in TPF as them breaking a treaty to hit us). As OBM said, they don't want to pay a cent to a foe they view as dishonorable. If PC were to take this chance and let them go, it should diffuse hatred on the TPF end. I mean, its hard to be angry at someone who just gives you peace. Mhawk was trying to put the past where it belongs, the past. I feel if PC showed a similar sentiment, the hatred would die down.
Sure there is a chance the cycle will continue, but I feel there is a greater chance it won't.