Solution to Russia's conflict with Georgia

The Russian Jotman reader I quoted in the previous post has pointed out that there exists an equitable solution to the conflict between Russia and Georgia.

This could actually be a beautiful case of a birth of a nation - if any "nation" can make sense at all. Russia has North Ossetia as a constituent member of the Federation, and Georgia has South Ossetia as a "breakaway region": hence they could both set let them go, creating a nationstate of Ossetia/Alania... No one would lose their face that way, as they are roughly of the same size and population (although N.O. is understandably much more developed) and there would be a little less mess in the world. But it seems to be an opportunity long missed. . .

Maps: Wikipedia