-[X] This isn't worth it. Call for peace with the Loyalists and accept that they will be able to use this travesty as a victory for leverage in negotiations. Victoria will present a peace plan. It will be significantly better for them than what you offered. You get to choose to accept or reject it. Negotiations will keep you locked up long enough that snow will be on the ground and practical campaigning will be done with.
-[X] Blackwell is waiting to do enough damage to you that he can land a decisive blow. If you halt where you are and simply wait through the winter, you deny him that opportunity, and this momentary perception of victory starts to fade. Throughout, you'll send annoyance raids using your F-16s; this won't apply much pressure, but it'll at least make the point that you have in no way been beaten by this sanctioned terrorist attack. If he attacks in order to keep his symbolic victory, great, he'll suffer a massive defeat! If he doesn't attack, also fine. You'll withdraw with spring, your point made; that is your walk-away point. The risk is that this one plays really fast and loose with the risk of a regime change which, given the Farmers' stated stance that they'll peace out on first offer, will drastically undercut the message you're trying to convey.
-[X] Blackwell has overplayed his hand; by calling a muster at Rochester, he's given you a concrete target. If you move out to the city with your motorized forces, you should be able cut the forces there off from supply and communications, and force a decisive battle with your superior forces. The risk is that they get enough warning to simply, leaving you very overextended and vulnerable to attacks on your own supply lines.
I don't think this is a time for half measures. We must commit to something.