Quote Originally Posted by Sidnne
That is debatable. The physical village, i.e. the buildings, were destroyed, but its residents live. If Nagato dies here, then Konoha's attacker has died, his goal (capturing the nine-tails) was not accomplished, and Konoha can be rebuilt. Is it really a defeat if "the will of fire" lives on? Its all philosophical, of course.
I agree. Konoha lost a big battle, but they won "the war", because Naruto (for various reasons) beat Pein, who is presumably the strongest in the Rain. Nagato isn't really in a good bargaining position. He can fight and probably die, or surrender, or listen to Naruto and (potentially) make a treaty between himself/the Rain and Konoha, to at least protect what is left. I suppose he could lie, and sic the rest of the tailed beasts on Naruto in a few in-manga-weeks or whatever.

I do think you're right about Nagato probably dying, but I would like to see a real peace treaty between the two. Otherwise, I don't see how Naruto is ever going to make peace in the ninja world. Nagato's whole point is that you can't do it by fighting, unless you're willing to kill everybody. If Nagato dies, Naruto's first act for peace will be "luck".