It's a case of combining the necessary with the pleasant.
This is just my opinion, and nothing more so don't take it as "The Truth". I think that Putin is in a very tough spot. On the one hand backing down is hard. Especially since the rebels are sure to lose, rapidly and decisively. Pulling support to the rebels now would mean a solid, although costly, Ukrainian victory. It would also mean caving to the EU. It would show that Russia can be strong-armed. And if it was done once over something as vital as Ukraine, it can be done again, over things less essential to Russia. On the other hand the cost of this continued defiance of the whole world, and the fact that nobody (literally nobody at all) is siding with Russia on this, puts him in a weak position. Many traditional partners like Belarus, or China, are willing to continue business as usual, and certainly won't join the sanctions regime or even try to pressure Russia in any way. But they're not backing Russia's position.
However there is another side to this. If he can drag this out until winter, the rebels are likely to have a much stronger position since defense is easier then offense, and the Ukrainian military is in horrible shape as far as supplies and field living conditions go. Come fall, the Ukrainian economy will likely hit another crisis. Borrowed money will start to run dry, the economy is still shrinking, and the damage will be more pronounced then, and of course gas will become an absolute necessity. Reverse from Europe can't cover more then a fraction of winter-time gas needs. Russian political analysts are predicting another internal power struggle of some sort come fall, given that the initial euphoria of electing a "new" government will have worn off, war weariness will start to set in, the economy will continue to swirl rapidly down the toilet, and the government will run out of funds. All of this gives Putin a strong incentive to try and drag this out until the October-November timeframe.
If the EU doesn't pass a fourth round of sanctions then it will look like Russia "successfully" defied the EU and the US. Given that by that time the position of the Kiev government will be extremely weak, we could see a new government take power, we could see a collapse of the general war effort in the east, we could even see some sort of agreement between Poroshenko and Putin. All of this can be sold domestically as a victory, might be a better outcome then coming to terms now, and certainly is possible to pull off.
A final thought, the Ukrainian economy is in bad, bad shape. The money to prevent economic disaster isn't there, even the money to keep the government afloat is lacking. The EU and the US are providing small quantities. So far the bulk of the funding is coming from IMF loans. And borrowing from the IMF is like dealing with the devil... Under Yanukovich, before things really went south, Russia was already giving Ukraine 15 billion without the nasty internal policy strings. Right now the money needed is much greater. More then the EU or US are willing to give. Probably more then the IMF is. At this point, I strongly suspect that even Russia can't/won't foot the entire bill. Which means that Ukraine is in for some rough times even under the best of circumstances.
