It occurs to me that the ultimate resolution to Palestinian-Israel question will come from outside that binary. The Wikileaks cables, and the radical shift in power and governance that may really be happening in the Arab world, Egypt and Lebanon in particular and potentially other states if the revolution is exported, are game changers for both themselves and Israel.
There is a very real risk of a major war. Israel's strategic and tactical position shifts if new governments in these places begin a much more active campaign of support for the Palestinians either through arms or threat of, or diplomacy. Israel's response, given the past record may well be military and the outcome likely much less certain than it was in 1967. Suddenly Iranian nuclear facilities seem very far away.
Let's keep our fingers crossed and hope that brains more than brawn are used to work their way through this.