Here is my understanding of why (and how) the plan will work.
The people of Kashmir – on both sides – can choose which nationality they want – Indian and Pakistan.
The existing broders are final for Pakistan & India – the international border.
Kashmiris of either “nationality” can move freely within all of united Kashmir. BUT Indian Kashmiris can move about everywhere else in India and those of Pakistani nationality can do so on Visas – and vice-versa for Indian Kashmiris to move into rest of Pakistan.
Neither Government can “invest” in the part of Kashmir across the international border without the usual procedures.
Movement of goods and services outside united Kashmir is regulated as usual.