One other line of thought... Although Russian media trumpeted that South Ossetians would love to be united with North Ossetians within the Russian Federation, [on the other hand] formation of a South Ossetian nationstate would ignite a new separatist trend - this time in the North Ossetia and cause a hell of a new headache to Moscow, this time much closer to home - meaning to oil.As Sanjuro noted previously, autonomy would appear a likely first step on the route to integration within the Russian Federation.
With a population of about 100,000, the territory of South Ossetia looks too small and too poor to constitute a viable nation. The relative poverty of the Ossetians was a major reason Ossetians sided with the Bolsheviks in the aftermath of the Russian Revolution, in constrast to Menshevik-leaning Georgians. South Ossetia remains impoverished (the average citizen earns a dollar a day). In terms of trade, investment, and financing, South Ossettia is almost entirely dependent on Russia. In terms of population, 66% are Russian-leaning Ossetians, 29% Georgian, with 5% belonging to other minority groups.
Flag of South Ossetia (via Wikipedia).