I hate to say it, but the only real solution is violence so bad that the Palis beg the Israelis for forgiveness. Not just for a few days, but for a few generations. Something along the lines of what we did to Dresden.
Sound harsh? Of course, it is. But this is a war of attrition. One side has the capacity to win, but not the will. The other side lacks the capacity, but obviously has the will. The status quo is not a recipe for victory. Any serious student of history knows this (NYT editiorial page excluded).
This is not only true for Israel, but the West in general. We could end Islamic terrorism with an offensive so awesome, future generations would shiver at the thought. But we won't do it 'cause we haven't suffered enough to abandon our civilized ideas. Too bad the other side doesn't have any civilized ideals.
Who decides when a conflict is over? The loser, of course, But the loser has to know he has lost. Need Proof? Germany has become seriously pacifist after we decimated it in WWII. You won't see them attempting anymore lemming like military ventures until your grandchildren are safely dead.
Your point about the Palestinians is very well taken. Great post.