Their options are either a) ignore or b) engage. The latter would mean trying to change the terms of the argument in such a way that there is no unambiguous vote for independence.
I think there is no chance for the government to continue ignoring what's happening in Catalonia. The second course of action has some chances, since the consultation questions are somewhat controversial or tricky. If the "Yes-Yes" option doesn't get a majority of the electorate, that's another card to play. However, the government will have to engage in some kind of pacted solution afterwards.
They have to engage earlier. Catalans are the people who negotiate and can be negotiated with. As it stands, the Madrid government is almost provoking the catalanista electorate into turning out and voting Yes-Yes. Or, should I say, "si no, No!"