The history does not credibly support this analysis. For Halsey to say that the Japanese were on "the verge of surrender" is somewhat misleading; while the Japanese may have been willing to seek a negotiated end to the conflict, they were certainly not willing to surrender unconditionally, and in fact were throwing away an appalling number of lives in India, New Guinea, and islands all across the Pacific to prove this. An unconditional surrender was seen as necessary because the Western Allies believed that they needed a free hand in the postwar period to drastically restructure the political systems of the Axis countries and prevent future militarism. If you look at the example of the interwar period (in which negotiated truces had repeatedly failed in the face of determined militarism) and then note the result of the postwar period for both the Japanese and German economies, it would be very hard to argue that the Allies were wrong.