No, I don't know what Putin is playing at either.
As far as I remember, it took Slobodan Milosevic years before he pretended to disown Republika Srpska. Putin looks like he's disowning the "People's Republic of Donetsk" before it's even been born. Or is he? Who can say? Some might call this an example of Putin's cunning but, as Lawrence Freedman points out in his book Strategy, once you've earned a reputation for cunning nobody trusts you. Take Odysseus, for example. With his ruses and wiles and backtrackings Putin is losing credibility - even among his balaclavaed supporters in eastern Ukraine it would now seem. On the other hand, cunning always works on willing dupes. Maybe Putin is gambling that plenty of Western businessmen will be gagging for a "reset" once all this nasty Crimea business has been forgotten.
Update: The separatists aren't listening and are proceeding with the referendum. All that time and effort printing fake ballot papers is not going to go for nothing. To quote Duck Soup:
Ambassador Trentino: I am willing to do anything to prevent this war.
Rufus T. Firefly: It's too late. I've already paid a month's rent on the battlefield.
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