I think this was a good article that covered the issues in a balanced way.

Doesn`t really look very hopeful, does it?

Both people are irreparably divided between liberals and fundamentalists: neither a viable Israel nor a viable Palestine are possible without the glue of war, or at least the fear of an imminent war - otherwise they would have long been split, sadly hence, both leaderships will do everything in their power to maintain the "Business as usual" model.

All three other scenarios are unstable because they would force liberals and fundamentalists to live together, which is simply not possible without a war.

Since this cannot come from within, only a massive international intervention could change the situation, but for a stable solution, any such intervention must consider the full complexity rather than stereotype all Israelis and all Palestinians as if they were one.

Think of the following classic riddle: a farmer has a wolf, a sheep and a cabbage which he must take across the river, but has only space for one of them at a time in his boat. The only thing preventing the wolf from eating the sheep or the sheep from eating the cabbage, is the presence of the farmer. This is solvable, but must be handled with care and not in just 3 travels.

Liberal Israelis cannot live together with fundamentalist Jews without a war, nor with Muslim fundamentalists.
Liberal Palestinians cannot live together with fundamentalist Muslims without a war, nor with Jewish fundamentalists.
Fundamentalist Jews and fundamentalist Muslims cannot live together either.

Stable solutions exist, but must contain at least 3 states, more likely 4 or 5.

Now thinking of the overall instability of the Middle East, the Kurds also are in constant danger without a state of their own, and being persecuted by 4 different states, they too make the region volatile: could the Kurds too be incorporated in an internationally driven Middle-East solution?

"Hamas hates the secular PLO, and it fought a brief war against Fatah in 2007 to gain control over Gaza."

Revisionist history.

Hama won what was regarded by the West as a free and fair election. Fatah refused to cede power eventually requiring a military intervention by Hama to remove them.

Interesting article but he did not cover the one point that makes
any two state solution impossible.
When the Arab Islamic armies conquered Israel in the 6th century they
held it I think uninterrupted until the Ottomans took over.
So the area was under Islamic ownership until the League of Nations
and then the UN granted the British a mandate over the area and that
was when the troubles started.
Under Islam land once held by muslims becomes Islamic land forever,
Therefore a two state solution would mean that moslims to agree would
have to defy Allah to allow some of that land to be held by Jews.
The Jews by the way lived there for some thousands of years.
In the Koran of course the Jews are held to be the worst of People.
So anyone who thinks they can solve this has a battle on his hands.

Dear Bezza,

You wrote: "Under Islam land once held by muslims becomes Islamic land forever, Therefore a two state solution would mean that moslims to agree would
have to defy Allah to allow some of that land to be held by Jews."

Which could just as easily written as:

Under the Jewish faith land once held by Jews becomes Jewish land forever,
Therefore a two state solution would mean that Jews to agree would have to defy their Jewish faith to allow some of that land to be held by Palestinians."

Therein lies the problem.