There should always be room for an adult conversation, but even if some kind of agreement were reached between the authorities and fan groups on the limited use of pyros in football grounds (we know that won't happen) I don't see it solving anything. I can just about remember doing daft stuff for the sole purpose of pissing folk off, and that has to be part of the appeal here. These groups obviously love the friction their actions create, whether it's between themselves and the police/government, the clubs they spend so much time and money supporting, or their fellow fans.
The authorities' intransigence may do nothing to help the situation, but even if they bent over tomorrow, I think the loss of control you mention is inevitable. It's just a matter of when and where.