If Israel thought Gaza and the West Bank was their own they would have moved those in Gaza to Egypt and those in the West Bank to Jordan by now.
Even now, President Bush still talks about a two-state solution. On the other hand, polls in Israel show that a majority of Israelis favor peacefully encouraging non-Israeli arabs to leave.
Today, Israel's body politic is unified in a way never seen since 1967, with more than 80% of Israelis supporting the war with Hamas/Hezballah.
It is my fervent hope that this national unity in Israel, at long last, may enable Israel to initiate a program to relocate the Palestinian arab refugees dwelling in temporary homes west of the Jordan and get them into permanent homes elsewhere. Of course, Prime Minister Olmert never has embraced this idea, and Defense Minister (and Labor leader) Peretz comes from the leadership of Peace Now, so the leadership would have to be pulled by tyhe body politic before it will get behind this idea.
It may turn out that Benny Alon, who proposed a similar plan some years ago, simply was ahead of his time. Here is a link to his plan: http://www.therightroadtopeace.com/eng/DefaultEng.html