********** Sensitive Topic, hence refraining from using names.*********
The Article 370 gave special status to J&K, which ensured, no Indians from rest of the states allowed to buy property in J&K, and many other reasons. This wasn't fair. The citizens of J&K could purchase property elsewhere in India, however, the inverse isn't allowed.
J&K saw a mass migration of people of certain religion to other states to live in a better place as the J&K had been in conflicts. This caused a convergence of people from the other religion in the state. Government's spending was consistent to meet the needs, however, the state was never stable. The nation paid to cover J&K costs, but still, people moved out.
Today, If, democratically chosen, J&K might prefer to join other nation, but this decision is not fair, because Majority of its citizens relocated to elsewhere seeking stability, hence the biasedness. Even, the local government might oppose joining india, despite being paid by India. The democratic vote, if any, is not at all fair, hence the decision was made to convert it into UT's, to restore the lost balance, which the rest of the nation has.
Why only UT's?
Union Territories give certain tax benefits (and security, etc) and aid in reducing the cost of living. This benefit may encourage others (Companies/Citizens from other states) to take advantage and might move to J&K, essentially restoring the lost balance.
Also, Critical decessions are made by those, who stand by the interests of the whole nation and not by those, who are biased.
Nation's security in deterring poachers from other nations is essential and could be done effectively, only if the state is secured. Now, the state is burning and those who are deterring poachers (army/police) are being burned by poachers and residents, from both sides. This had been destabilizing in the region and often gave a significant advantage to the poachers, essentially encouraging poachers.