The reason why America (and others) have in the past made nice with Arafat is that they thought they could get something out of him. Clearly, that entire pretense is gone.
Arafat is being squeezed from both ends, he doesn't have long and America and Israel have decided that the alternative isn't that bad. In the past, they would have been afraid that more radical factions would take control of the PA. It does not concern them now.