i think the situation has gone too far for any realistic reconciliation between tamils and sinhalese.
though the ltte is way past its utility and has become a nuisance/menace, still given the insecurity of the tamils on the island, it is the only protection/refuge against sinhala militarism/chauvanism.
best solution is to provide some level of autonomy to the tamil regions and try to build peace. it is will take some time. in the meantime it would also be good to get the ltte to dilute its violence against civilians dissenters. the ltte will become inconsequential only when the tamils trust the sinhala leadership.