Well, moving the border outward doesn't change that problem. Whereever the border is, there can be rocket attacks over it. You've just changed the line where it can happen.
Only by giving the Palestinians a country can you begin to defuse the root anger. They won't be happy with whatever the border is, but it's a start. In a generation or two, perhaps it will be sufficient.
You have more faith in the Palestinians and their leadership than I do. I don't think they will ever be satisfied.