I don't know if I agree about Japan being screwed under Chinese leadership. China is a very generous country. Personally, I've seen Chinese groups warm-heatedly invite many foreign friends including Japanese (though I see Japanese and Korean groups preferring to keep themselves pure) into their community. If Japan submits and accept Chinese leadership, what would it lose? I think nothing or next to nothing. Diaoyu, if lost, is not much of a loss at all and with a dramatic warming of relationship, I can see China agreeing to joint exploration. Japan's economy would gain a great boost from Chinese support as China would most certainly bring big economic baskets during relationship warming meetings. What would they lose? I just don't see China relentlessly punishing a country for its past if its current self is repentant and ascribes to Chinese leadership in the region.
But I do agree that the Japanese are stubborn in their thousand-year-ways and may choose to continue to distrust China. It is important to note that that was much easier in a time period where countries were much more isolated and less dependent on foreign trade and relations than today. Once the environment is right, it would simply and obviously be foolish self-alienation. It remains to be seen if that stubbornness will prevail or if the desire to avoid huge obvious mistakes will.
And from the Chinese point of view, if Japan submits to Chinese leadership, then Japan becomes a willing ally.
It would be simply be counter-productive for China to continue anti-Japanese invective.
Look at the example of the USA which vilified Japan during WW2, but when Japan became an ally, the relationship changed a lot.
I think Japan will eventually re-orient towards China, but that will only willingly happen when China becomes wealthy and hi-tech. Then pretty much everyone in Japan will share Ishihara's view that Japan doesn't have any choice in the matter.
A similar calculation applies to South Korea or a unified Korea, which is much smaller than Japan and also much closer to China.