The Israelis pretend that what the Palestinians *want* matters. That is, at any instant, Israel could declare Gaza to be a Palestinian state *right now*. And once their West Bank settlements have either been evacuated or integrated into Israel behind the wall, Israel can unilaterally declare the West Bank to be a “Palestinian state” as well.
Then Israel could completely cut off both of them, and say when they actually have a government that controls all of their state, then Israel will negotiate with them. If they do not control their own land, they are not a de facto government. So, to the Palestinians, have a government or live in chaos. But leave us alone.
Since the Paleos have made themselves into a people of chaos, they will probably remain chaotic.
The most important thing of all is for Israel to cut them off. No Paleo should ever be allowed into Israel. The Israelis must accept that Palestinian problems are for the Palestinians to solve. If they cannot or will not do so, then it is not the Israeli’s business to help.
If individual Israelis want to help the Paleos, then they should have to leave Israel, travel to a third country, then visit the Paleos to help them. Otherwise, nobody crosses the borders.
Essentially that's what is happening with Gaza. Israel is in the process of formally relinquishing and former responsibilities as occupier. The stumbling block, getting Egypt to provide access for humanitarian supplies. Personally I think Sharon would have done the same thing with the West Bank. Draw borders and leave. A unilateral solution is really Israel's only option, there's no one to negotiate with.