Because they are worth far more as victims.
Their Muslim brethren don't want them. They do want the support their situation brings from all over the Muslim world (and Europe).
I agree that this is the most likely reason. The Palestinian gov't in exile was created in Egypt and without Palestinians there really is not a need for a so called gov't and a need to get rid or Israel as a state. It worked and the refugee status plays in the UN like a strad. Basically they are Arabs no different from Jordanians when the area was all Transjordan.