Well, let me rephrase it: at the moment, the gap between what Russia is willing to give up and what the West and Ukraine are willing to give up is so wide that compromise is impossible, at least for now.
Honestly, I simply don't see the situation changing any time soon. Slapping sanctions on state we dislike for very long period of time is something the West is good at: just witness the embargo on Cuba, or the sanctions in Iran. Ignoring civil war for question of principle is also something we're good at: witness the refusal to back Assad in Syria, despite the fact that he's probably the world's best shot at ending the civil war.
On the other hand, I don't see Russia accepting any significant concession. They won't give Crimea back, and they won't stop supporting the rebels if they don't keep some other kind of veto on Ukraine's foreign policy.
So while compromise would be the ideal solution, I don't see it happening anytime soon. The only ends I see to the war in Donbass is either a Ukrainian military victory (Unlikely: despite your assertions that they're carpet-bombing civilians, they are actually reluctant to launch full-scale assaults), or a Russian military intervention, followed by annexation of the Donbass and Luhansk (Also unlikely. And if Russia was bold enough to do that, they'd probably also start sending "rebels" in other areas of Ukraine).
On another note: what would you personally consider a reasonable compromise? I would consider leaving Crimea to Russia, while signing a new version of the Budapest memorandum that would engage NATO and Russia to actively help Ukraine in case of aggression rather than giving it a mere right to consultation. It would also guarantee Ukraine's right to pursue its own foreign policy.