Yes, Ukraine is a failed state, but there is not yet a civil war. There is also still a central government, not empty, bullet-ridden halls of government and different warlords trying to install themselves as president. I say there is till time to pull back from the abyss and call a peace conference.

It would need representation from all factions with power on the ground and credible outside negotiators (since the European countries are a bit to close to the conflict, perhaps India or South Africa could provide some). A compromise might be reached along the lines of keeping Ukraine together, but with a lot of power decentralised to the regions, ensuring that neither the coupists in Kiev nor in Donbass are rounded up and shot. This should be acceptable to Russia, considering it is what they are pushing for.

The problem is that I doubt the Kiev government could survive the result, Maidan is still mobilised and might do another coup. Also if the western backers don't consider a compromise acceptable, but still prefer conflict, they would probably back nationalist radicals in such a scenario.

So while not likely to succeed, I think calls for a pre-emptive peace conference is the best any outside force can to for the people in Ukraine.

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