Yes, an outside target can be used to tackle internal strife. But, there is no sign that the Pakistani army is actually in any danger of being removed from power, barring a major military defeat, nor that it will lose its autonomy over military policy.

If say, India were to let this slide, the default outcome is another such attack. Given the above motivation of the military to create a conflict and the ideological bent seen in Gen.Munir's speech, the expected outcome would be to repeat till this they get a conflict.

Yes, the deterrence won't be perfect. The Pakistan Army might end up repeating an attack whenever there is a relief from economic constraints(it doesn't have money for frequent purchases of expensive weapons) or from pressure from its allies (who dont want their oil trade or pipelines to suffer). But this means that what India has to do to minimize the number of attacks is to not let an attack slide by with low cost for the army.

The best case scenario would be a peace deal, as was arrived in Vajpayee and Sharif's time, but it was sabotaged by the Kargil operation, for exactly the reason you mentioned - a peace deal marginalises the army.