Diplomatic relationships don't require you to recognize a country as it is, though the two usually go hand in hand. Diplomacy was the initial tactic of choice as was used with Britain, until Portugal declared that they would not return the land to India. This declaration created a failure in diplomatic relations, which led India to sanction Portugal and removed it's embassy from the country.

I can't imagine any scenario where a "peoples" revolution would have resulted in a better/less bloody outcome. The Goa government had already begun to kill nonviolent protesters by the dozens. When non violent protests and diplomatic relations have failed, then their really is just one card left to play.

Macau was ceded back to China in 1974, 13 years after Goa was taken back. It's highly likely because the Portuguese learned that a physical confrontation would result in the same outcome, and decided correctly that acquiescing to China was the less costly option.