There will never be peace in the territories until there is a price exacted for breaches of the peace. Just killing the perps accomplishes little; there is an endless line of misfits ready to take their place, and no one cares if they live or die anyway.
Land is the only pressure point that actually transmits pain. Every attack that crosses the line into Israeli territory must trigger the permanent loss of territory. Israel must create a buffer zone from arab land, and widen it each time a rocket crosses the fence.
The "Land-for-peace" one-way ratchet has to be reversed. Granting Israeli land in exchange for peace gives the wrong incentive, it encourages the arabs to launch attacks in hopes of being bought off with yet more Israeli land. Reverse the wiring, however, and you have a formula that will work. Live in peace, and you'll be left in peace. Attack us, and you'll be expelled half a kilometer at a time.
>...expelled one kilometer at a time.
There.