In 1962 it wasn't realistic for the PLA to hold onto Zangnan (Arunanchal Pradesh) for the long term. They were also concerned about Soviet and Western intervention. China in 1962 was not in the position to take on two superpowers while fighting India at the same time. But times have changed. China had replaced the former superpower to its north as the world's second superpower. And the US is at a slow terminal stage.It isn't realistic for China to take Arunachal Pradesh. Not only will they have to fight a war to capture the territory, but it's nightmare to hold as well. The province is south of the Himalayas and and supply lines to it have to go over the tallest mountain range in the world. Moreover, it is a core interest of India because the territory threatens to cut off the Seven Sisters (I guess it'd be Six Sisters in this case), so there will be incessant war and heightened tensions. Back in 1962, China actually captured this territory but they were faced with the same challenges and figured that it's a better idea to unilaterally withdraw instead of staying to fight.
For, today's geopolitical landscape, I would argue that it is much more feasible China to take back Zangnan permanently. First, they need to mess up North East India. The Seven Sisters of India had never legitimately belonged to it. Six of them belonged to the Burmese Empire before the British colonized Burma and incorporated them into the British Raj. One of them was stolen from China by the British. Plus the Indian government doesn't treat the people there well anyway. If India truly goes to war with China, then the Seven Sisters destabilization campaign needs to be on the menu. The Indian Army is already very busy there as of today. So adding another pressure from the PLA in the North, and PLA firepower interdiction on the Siliguri Corridor (the Chicken's Neck). The PLA can mess India's North East, while invading and taking Zangnan. And then the remaining Six Sisters can choose their own destinies and become the new buffer state.
I was thinking like you too for a long time. Why don't China just take Aksai Chin for Zangnan? But after 2017, this is no longer acceptable. Its because the Indian elites don't just want Aksai Chin and Zangnan. They want Xizang (Tibet) too. They have been harbouring and propping up that Dalai Lama and his CIA-made Tibetan separatist "government" on Zangnan for decades now. They have been talking about Xizang as if it is their backyard. Whenever they speak about their border with China, they specifically say that they have a border to with Tibet instead of China. So they have never respected the One China Principle despite their official stance. So no, Zangnan needs to return to China permanently, and they need to capture or exile that Dalai Lama and his separatist gangs for good.I imagine that what you propose is going to be China's opening offer, but they'll be willing to settle for Aksai Chin while India keeps Arunachal Pradesh largely along the LAC as long as both parties repudiate the legitimacy of the McMahon Line. India's objective is going to be "Give us everything we want and then we can be friends", which is fine as an opening position, but it tends to be the only thing India is willing to settle for as well.
The Indian government and elites can never ever be trusted. They always double speak, and they have trouble sticking to agreements. Give them Zangnan, and China is officially recognizing Indian ownership over the Dalai Lama and ancient Tibetan lands, along with their historical sites. Pretty soon, we are going to hear the Indians start demanding for the rest of Xizang. India had its chance when China was more agreeable, and it went to war anyway. So that opportunity is gone, and should never return.