Basically, as I see it, Likud is basically, at this point, bypassed by events. Gaza, whatever the merits of the withdrawal, is gone. Now Sharon intends to, whatever he says in public, withdraw behind the "temporary" wall and annex those areas of the West Bank to Israel.
Am I reading this right?
Pretty muc, yes. The Prime Minister prefers a peace agreement but I think it is pretty clear he will eventually support unilateral separation.
I would not be so certain that the current route of the fence will be the border. I don't think the Tomb of the Patriarchs in Hebron, for example, will be abandoned. If it comes down to unilateral action I suspect a finger of Jewish land, similar to that where the fence extends to include the Ariel bloc in Samaria, will eventually have to be created in southern Judea. Such an act would be a major provocation to the Arabs and I still think the Prime Minister believes a peace agreement is possible. That is the only reason it hasn't happened yet.