5 million is not alot to create world peace even for a little while. Also, More deaths would have been caused if we had waited for their surrender; the deaths would have been less if we had dropped the bomb on a deserted island and had the japanese watch what would happen if they didn't surrender.
I agree that we could have just waited for Japan's surrender, but it would have cost thousands of lives more. A demonstration of the nuke would have ended the war along with the bloodshed quickly.
It was not a war of extermination, the japanese were predicted to surrender near the new year, although I do agree that the bomb was needed to end the war quickly. Just not on innocent civilians.
There is a more peaceful way to end the war, Option #2. It would scare the weary Japanese into submission, without casualties on either sides.
I believe option 2 is the right decision because the, ready to surrender, Japanese would have needed the little push to end the war; it would also save many lives on both ends.