There already is a Palestinian state: Jordan.
Nope.
It may have been intended as such, but it's out of the question now. Nobody country is going to take these people who call themselves Palestinians, which means that they're going to stay where they are -- all several million of them.
The only remaining question about a Palestinian state is the form of government. Israeli occupation is one possibility, but that cannot last for a variety of reasons.
The reality is that eventually the Palestinians will have a self-governing state whose borders will be approximately those of the current Palestinian Authority.