They're still using Purple Hearts from the first batch MacArthur ordered, which was 1/4 of what he expected to need. And he didn't believe the solid intelligence that revealed Operation Olympic, the initial invasion of the home island Kyuushuu, was not going to work (too many divisions moved to that island, 6,000 or so kamikazes (an underestimate) would be ready and would not have to navigate all the way down to Okinawa ... many people don't know that the Battle of Okinawa was the single most expensive in lives for the US Navy...).

Those planning Operation Downfall, the overall one to capture the home islands (well, the regime would fell after the 2nd invasion of the main island), who didn't know about the Manhattan Project were planning to make liberal use of chemical weapons. Those who did ... well, if the 2nd bomb failed, there's a very good chance future production would be reserved for Olympic, with up to 8 of them being used....

As for their strategy, they started the war with an assumption that we weren't tough enough to see it through. It's said that the truth didn't sink into the IJNavy until we lost 2 Rear Admirals (2 stars) in a single night action off of Guadalcanal, in a body of water that earned the name Ironbottom Sound, so many USN and IJN ships were sunk there.

So when it came to the home islands, they hoped they could make it expensive enough we'd give up before the regime fell. Even after we'd firebombed all their major urban centers minus Kyoto (politically critical for the Emperor) and the 4 a-bomb targets and alternates....

It's a very good thing for the world everything came together in that August and they surrendered. And if I had a time machine, I'd never ever try to change anything in history going up to that point, the horror of those a-bombs, even if each caused less loss of life than the first Tokyo firebombing (in only it and one other attack did everything come together including the weather and winds).