China in fact doesn't need to do anything so drastic. HK is on the periphery of their political system and the politburo is probably united on the issue - so there is no immediate threat to China's stability or the Party itself. The one item missing from your analysis is that October 1 is the 70th anniversary of the communists coming to power. It’s my understanding the CCP is bound and determined to celebrate the glories of the Party on that day, and so Hong Kong must be pacified no later than a couple of weeks before then.
Interesting. The KMT on Taiwan celebrate 10 October as Double Ten Day celebrating DR. Sun Yat Sen’s proclamation of the Republic of China.