the american foreign policy establishment (represented by madeleine albright this morning on cnn, e.g.) is still saying 'there must be a two-state solution', that's the only hope etc. if that's the only hope, there is no hope. the idea that israel ever was going to or ever will permit a palestinian state to emerge is false, whatever they may say. anyway, why isn't that just a formula for more and worse war? so if you can't come up with any new ideas, we're going to recapitulate this thing ad infinitum.
really, defining states ethnically/religiously cannot not lead to violence. it's just a wee bit as though we defined the united states as a white nation, for example. i think the only possible solution would be a fully multi-ethnic full democracy. but israel will never permit that either, because then it would have destroyed its own purpose and definition. so i would see this situation persisting for the next, say, century, with periodic outbreaks of slaughter.