Any decision made in 1945 on how to deal with Japan was certain to be awful. In an alternate timeline the debate is probably over whether dropping an A bomb would have been a lesser evil than the Japanese famine in the winter of '45-'46.
That's the other thing that I wondered. I mean, by most accounts, Olympic (which was slated for November, 1945 if memory serves) and Coronet (set for early-to-mid 1946) were expected to have casualty counts on both sides that would've made the Iwo Jima and Okinawa campaigns look like dinner theater by comparison. On the other hand, the Japanese Navy was practically nonexistent, and its air force only slightly less so (with the Japanese having nothing that would've presented a serious threat to the B29 anyway -- their fighters would probably have been used for close ground operations and going for slower targets like troop and supply planes).
So the options:
1. Drop the bombs, which turned out to have been the tipping point for ending the war (though this wasn't a given at the time).
2. Invade, resulting in a bloodbath on both sides.
3. Blockade and heavy bombing campaigns, which
may have produced a surrender, but at the cost of millions of civilian lives, many -- if not most -- through starvation.
The American public was severely shaken by Iwo and (especially) Okinawa; there were widespread fears among the government and military brass that the kinds of casualties suffered in the invasion of the Home Islands would tip the public decisively against the war. The second option may, therefore, have seemed less politically feasible.* The third option would have produced no guarantee of success, and would've had a human cost that could easily have been on par with the Holocaust. I don't think the dropping of the bombs was the "best" option; it may, however, have been the least terrible.
*I doubt if the effects on Japan's civilian population were given much, if any, consideration in any of these scenarios.