With the retreat of rebel forces to the main city by about 800-1000 fighters, the DPR has limited choices as the Ukrainian army asserts itself further in the region and shows the locals they are not the genocidal Nazi murderers the Russian propaganda has demonized them as. The rebels brace for a bloody confrontation, but the Ukrainian forces have the luxury of time on their side. They just have to seal off the border with Russia, fortify around Donetsk and Luhansk, and wait for the rebels to simply run out of 1) ammunition 2) show locals their inability to provide basic services, jobs, income.
The reason Russia cannot invade is because Russia can barely afford to integrate Crimea with its own weak economy. To invade Ukraine, fight the Ukrainians city for city in pitched battles and destroy infrastructure and industries they need, and then pay to rebuild and provide support for millions of refugees and dependents, is a burden Putin cannot handle even if he has the money from Gazprom.
And worse if an invasion triggers severe EU and American sanctions, and UN condemnation. The damage to Russia is simply too great if investments dry up and their stance of non-interference in internal conflicts in places such as Syria suddenly is hypocritically superceded by its own interference in a civil dispute in Ukraine. Crimea is a strategically vital priority, but taking the Donbas is a bridge too far.
The Ukrainians have mustered the will to fight and choke off the insurgency. Russia has lost the stomach to do much more and prolong the negative press. Kiev signed the EU Trade agreement, have a new elected and functioning government and their armed forces now have months of combat experience and the more fighting occurs the better they will get to face Russian soldiers if necessary. They could even try to retake the Crimea if Russia cannot get a negotiated treaty or peace agreed upon.
Russia also is dependent on Ukrainian industry and if they don’t get back to normal business Russia will be badly crippled by lack of parts and supplies. The cost-benefit analysis for Putin is starting to look less positive to piss off the Ukrainians for much longer. They cannot take back Crimea without open war with Russia, but they can win the Donbas and the rebels have ran out of rhetoric and supplies.
The mercenaries that came from Russia and abroad will see the writing on the wall much sooner than the locals and head back before the border is completely closed off. Russia cannot fly in supplies or reinforcements, and Ukraine is showing signs they plan to interdict Luhansk first so the supply lines to Donetsk is cut. When the skirmishes in the coming weeks deplete their ammunition stores and their fuel runs low, the rebels cannot maneuver or respond to raids and probing attacks by the Ukrainian forces.
The rebels still have several thousand fighters but the more guns they shoot the faster they will run out. The mercs from Chechnya and Russia will cannibalize the best supplies, take their loot and booty and drive back to Russia like thieves. They will only fight if the Ukrainians take complete control of Luhansk first and cut off their escape.
Will the Ukrainians storm the major cities? Probably not, they won’t need to. They just have to control the roads and the airspace. They have the numbers, and they have the firepower. The few tanks Moscow provided is not going to last against artillery and air power.
The rebels can try to draw the army into the city but that will risk the ire of locals who may turn on them as casualties mount. The fight is over as long as Russia is blocked from action, which Poroshenko has done. Putin can go to war but that would be the end of his new Russia before it is even a reality.