Just a quick thought: how about we have Gaza become part of Israel and move all Gaza residents to the West Bank. In return, Israel will remove all settlements from the West Bank. The issue of Jerusalem will sadly still be an impossible road block, but it would end the Gaza issue and the settlement issue for most of the West Bank. Jerusalem is still the sticking point because there is no city of equal value in the West Bank.
Jerusalem Solution?
Could it be possible to declare Jerusalem neutral, while dividing it equally right down the middle of the city while the Old City area is internationally monitored? What I mean is have the borders of Jerusalem be the furthest extent of either Israel and Palestine and have the city be divided 50/50 in territory where Palestinians get half, and Israelis get half, and the Old City be managed by, dare I even say it, the UN. Have all construction in the Old City that has begun finished, with no new construction. The "border" in the city should be divided along the easiest natural boundaries or by neighborhood.
Now the issue will be certain neighborhoods will be seen as important to one side or the other- tough luck. Get on your own side or hope your new neighbors are friendly. Sure, it won't be pleasant, and for a while there will be a bad aftertaste but a generation of bad feelings for a solution to a ten thousand year old problem sounds like a good deal.
I like to call this the True Two State Solution.
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