As others have said, Japan counted on capturing territory and setting up a defensive perimeter that would cost so much for the Western powers to overcome that they would sue for a negotiated peace. That brings us to the question of if that was possible.
Posters more familiar with the US political situation may correct me but my impression is that by the end of the war the will to send more Americans to their deaths was quite low. The US was willing to let Stalin have Manchuria and Korea in exchange for the Soviets joining the fight, indicating some desperation to end the war quickly and with as few casualties as possible.
That wasn't desperation so much as the Americans being largely unable to stop the Soviets from taking those territories anyways.
If the Japanese Pacific campaign had gone better and Japan is in the situation Andre describes a few post above, would the US not have agreed to a negotiated peace?
Certainly not. The Japanese were occupying Indonesia, Indochina, the Philippines (!) and big chunks of China, fairly late into the war. There were big American, British and Commonwealth armies in the field, slowly reconquering these colonies, and more troops were to come from France and the Netherlands as the war in Europe was winding down and they raised me divisions from the liberated populations. They totally were coming for Japan, and no amount of fortified atolls in the central pacific was going to stop them.
Japan had bitten off way too much when they declared war on the Europeans and Americans. With Germany defeated and the European powers free to focus their efforts on Asia, there were just too many approaches towards Japan wide open to cover effectively
1) Approach across the atolls, yeah it's going to cost time to do an island hopping strategy. But with a depleted Japanese navy, the allies could isolate atolls as they wished. Still the best defended part of the Japanese perimeter and a long way to cross before an American island hopping campaign gets into any important areas for Japan
2) approach from India - the commonwealth and Indian armies were fighting across Burma and the British navy was coming to retake Singapore. The Americans could have assisted this offensive if they chose to, and shifted focus there from the island hopping. Very difficult for the Japanese to affect an attrition strategy when their industry is already in tatters and can't replace planes and ships like the allies can.
3) Aleutian approach - daring but not logistically impossible. Certainly not for the Americans. So basically, if the Japanese fortify the central pacific, the Americans can still do island hopping along the Aleutian islands, then into the Kuriles, and that's already a place within B29 range to Tokyo. From there to Sakhalin, and you have a base to prepare the invasion of the home islands. The climate is terrible and the sea is foggy much of the year, but it's really only a minor number of islands and geographically actually the shortest route from American ports to Japan. And for the Japanese navy it is impossible to defend this at the same time as a combined allied navy drives across southeast Asia.
4) China and the war effort against Japan on the Asian mainland. With the war against Germany concluded, the Soviets as well as the Americans are free to bring greater aid to the Chinese, who were fighting a pretty hard fought war on the Asian mainland. The Japanese position against China wasn't bad but also not good enough to withstand active intervention, particularly from the Soviets. It doesn't really matter how good the Japanese position in the pacific is, when Stalin decides it's time to move in on Manchuria and Korea. The Japanese army wasn't equipped or supplied well enough to withstand the Soviets and given industrial limitations even wildly successful naval campaigns against the Americans and Europeans would not have changed that.
Basically, so long as major allied territories are under Japanese occupation, there's no motivation for the allies to seek a negotiated settlement. There would still be strong political will to prosecute the war effort and expend blood, and wealth, in order to win these territories back, expel Japan from her conquests, and then see about getting them to surrender.
I do think though that a full invasion of the home islands might not have happened. At some point the Indian army (which had seen fairly effective nationalist propaganda from the INA) would demand the withdrawal of Indian contingents from the commonwealth war effort and a start to the independence process. The French wanted Indochina back but would have found that the effort consumed much of their remaining power, leaving very little available to help the Americans. Same for the Dutch who, after reclaiming Indonesia, would find that the pacification of the reclaimed colonies tied up almost all of their military resources. The Americans, mostly alone vs Japan, would seek to starve and bomb Japan into submission just like in OTL. An Aleutian approach, with submarines and a huge bomber fleet operating out of Sakhalin, would allow this to happen much like an approach from southeast Asia would, where Taiwan and Luzon would be the staging bases for this final phase of the war.
So, no, a more successful pacific campaign for Japan does not put her into a more favorable position following Germany's defeat. They were done for.
