Revealing mistake: During the final confrontation in Veidt's lair, you see the actor Billy Crudup in his SFX suit reflected in Nite Owl's goggles, not the image of Dr. Manhattan.
Revealing mistake: In the scene in the Vietnamese bar, after the Comedian shoots his ex-lover and she falls to the floor, the camera shows a quick, panned-out shot of Dr. Manhattan and the woman on the floor. The bottom of her shirt is flipped up, revealing straps of the false pregnancy stomach she was wearing.
Revealing mistake: When Dr. Manhattan is interviewed on TV, his ex-girlfriend Janey makes a surprise appearance in the television studio and launches into emotional accusations. In one shot, we see both Janey shouting in the background and a live television monitor close-up of her face in the foreground. However, the TV monitor close-up shows Janey making completely different head movements than she is making in the background.
Revealing mistake: In the scene in which Dr. Manhattan is dressing himself, as he turns his head at the end, his CGI neck can be seen going through the collar of his shirt.
Revealing mistake: When Dr. Mahattan and Silk Spectre are on Mars and they are climbing upward in his gyrating clockwork structure, a shot from well above, behind and to the right of them contains some terrible CGI work of Silk Spectre walking in a completely unnatural, very mechanical way.
Revealing mistake: When Veidt and his cat Bubastis is walking over the bodies of the scientists after he poisons them, you only see Veidt's reflection and not Bubastis' in the energy panels on the walls as he walks towards and up the stairs.
Answer: He has spent years as a costumed vigilante despite the fact that it was illegal. He has a very strict idea of what is right ("never compromise") and has proven himself incapable of doing otherwise. So no, there was no real chance of negotiating with him - Rorschach himself made it clear he'd have to die if they wanted his silence.
Garlonuss ★
Death was not the only choice. Doc M could easily have teleported/banished Rorschach to Mars/anywhere secluded in an oxygen bubble. He could have spared his life and just made him mute or manipulate his brain chemistry/atoms to remove the memory of what happened. The point is Doc M is all powerful and could manipulate matter at his whim; death was just a plot device creating a chance of an emotive martyrdom/sacrificial ending.
Ethically speaking, exiling him to Mars or erasing his memory of the event can be considered just as cruel as killing him, because then his agency is being taken away from him. Rorshach's malcontent with the situation poses a problem for the other heroes, and since Dr. Manhattan isn't willing to let him tell the truth of what happened, he obliges Rorschach's demand that he kill him instead.
Phaneron ★