Dan, didn't you know that internal unrest in Germany forced the Kaiser to seek terms? Or haven't you ever heard of the food riots that took place in Germany from 1916 until the end? How about the mutinies of the Kreigsmarine in Kiel and Hamburg in 1918, or haven't you ever heard of that? The continued British blockade and the addition of a million American troops on the Western Front merely put a punctuation mark on a war that was already being lost behind the lines.
As for your contention that the Second World War was a direct result of not beating the snot out of the Germans the first time around, nothing could be further from the truth. The Treaty of Versailles was incredibly harsh in this regard and the world-wide economic Depression only made the situation worse. Germany ws brought as low as it is possible to bring a western, indutrialized society without returning it wholly to nature.
More than anything, the cause of the Second World War WAS NOT that Germany went undefeated in the field; it was a cultural phenomenon. The generation that fought for the Kaiser in 1914-18 was only the second or third raised in a unified German state (something that had not existed 100 years prior), and who had taken Bismark, Clauswitz, Otto the Great and their warrior past in with their Mother's milk.
And when they went to the front, they defeated the vaunted Russian army (helping to cause revolution in Russia, no less), fought the mighty French to the brink of collapse, and at sea fought Britain's Royal Navy to a stalemate, and at the end of the war were still in occupation of a not- insignifigant portion of France.
As those men saw it, they had won. What they could not fathom was how it was possible that their government surrendered with an arguable military victory in their hands. They left 3 million men on the battlefield while compiling those accomplishments, and the means by which they surrendered left a very bad taste in their mouths. The harshness of Versailles and it's ruthless enforcement only made matters worse. In effect, the Armistice and Versailles were Germany's Hiroshima and Nagasaki; they ruined the country economically, politically and socially.
THAT is the cultural enviornment that produced Hitler and the Nazis. That is the soil in which the seed of a Second World War grew. Such a thing would not have been prevented by razing Germany to the ground because it could not prevent the MINDSET that motivated the Nazis. The First World War is a prime example of how, sometimes, it is necessary to let an all-but-defeated enemy get off the mat. Finishing that war on the terms you suggest only guarenteed a second round.
Japan, of course, is a totally different horse altogether. Th Japanese reasons for going to war cannot be fully explored here (I'm sure you wouldn't want to read it anyway) and the Japanese culture (based on Confucian principles of the Harmonious Society) more or less demand that once a decision is made (for either war or peace) it will be followed through with the utmost expedience and efficiency and with very little opposition from internal social and governmental sources.
In that regard, if any of the surrender negotiations that took place prior to Hiroshima had been seriously explored, a settlement in which atomic bombs were unnecessary can be reasonably assumed to have been possible. Despite the Japanese pleas for more favorable surrender terms, there were plans on the board for a continued blackade (and continued starvation) of Japan, which were expected to last until mid 1946. The question regarding it's implementation, however, was just how long the US Navy could hold out against he Kamikaze (the USN had lost or had damaged 300 ships and suffered over 15,000 casualties from Kamikazes at Okinawa alone).
As for the "1,000,000 American casualties" estimate-- it was just that: an estimate. It is not a fact and bandying it about proves nothing because the event never occurred. You cannot say "the atom bombs saved a million Americans" in that way, because it's theorhetical. That is a terribly bad (and a very old, misunderstood and completely overused) argument. We'll never know if it was accurate (and that's a good thing) and there is no similar, real-life event to use as a comparison. The fact is that all the plans for the invasion and occupation of Japan were all very "last minute" and had gaping holes in them. There seems to have been hardly any realistic planning done because it had been assumed previously that Japan could not be defeated by 1945 and possibly not until 1946.
I would tend to take the "1,000,000 casualty" figures with a VERY large grain of salt. The same could be said about the "we saved x number of Japanese"; there is no way to verify whatever figure you throw out there.
Of course, since you can't play "What if.." with casualty figures, I can't play the same game with a negotiated surrender scenario; neither event occurred, and we're arguing 60+ years later, often with a whole lot more information than was available to any decision maker in 1945.
It sounds as if Germany wasn't really defeated in WWI, and what the allies won could hardly be called a "victory."