I still love the idea - as long as Egypt was in charge of the Northern Sinai/Gaza “Palestine” for security.
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The real problem for Egypt in the Sinai is that the area is infested with jihadis who are being aided by the local tribes. The jihadis attack and then flee back into the mountains where the Egyptian mil has limited access and ability. The other problem is the Egyptian mil quits at sundown to take up the fight again after dawn, leaving the jihadis free to do whatever they please in the meantime.
Any Palestinian state in the Sinai area, from an Islamist point of view, is redundant since they already control it.
By the “local tribes,” I presume you mean Bedouins. The aid that they give is on a mercenary basis, so beat the Jihadis’ price and you get their loyalty. Or, perhaps, they resent the Egyptian army because they get in their face more than the IDF used to do. That’s easy to remedy.
Egypt and Israel are allied for now, so if the Egyptians are scared of the dark, IDF can do the work then, or at least lend the Egyptians night goggles, if they don’t want us back in the Sinai.
The biggest benefit, however, is making Egypt responsible for Ghaza. They’ll simply drag out the Hamas leaders and shoot them, no legal niceties and no warnings, and that’ll be the end of the missile barrages on Sderot, Ashdod, Beer Sheva and occasionally further north.
Yes, Sinai is infested with Jihadis, so a few more from Ghaza and Judah and Samaria won’t matter much. Better to have them all together. Plus there’s hope that fishing and resort hotels will catch on, as well as transforming the desert into a garden, just to prove that they can do whatever the Jooos! did. We’ll help them prove it.