I'm unhappy about the behaviour of both sides but the sticking points seem to be Palestinian recognition of Israel as a legal entity and Palestinian desire to reoccupy lost lands despite the impracticalities.
The sticking points are numerous however one of the least important is whether Hamas recognises Israel, it has no choice but to recognise Israel in all but a written word.
Israel currently holds 1.2 million palestinians prisoner in an outdoor refugee camp restricting food, medical aid, and essentials in direct contravention of the Geneva convention in regards occupying powers and those of punishing the mass population. Why should Palestinians recognise an illegal brutal occupation who does not recognise their right to exist ?
The barrier of "acceptance" is just another smoke screen implemented by Israel to extend the occupation and land appropriation illegal under all International law and the road map.
Israel in truth could care less about whether Hamas recognises Israel, they don't even accept Hamas as the legitmate political power despite the elections being fair and entire accurate. Why would they care what the terroists do or don't accept. It's just another in the very long list of excuses Israel puts forward to ensure it can continue what it has done for 50 year, oppress, lock up, kill Palestinians and appropriate their land.
I suggest you do some reading of BTselem and other Israeli groups who will tell you exactly the same thing.
There have been many other mass movements of people over the years but those who moved always settled in new areas without nursing grievances supported by continuing violence forever. The separation of India and Pakistan is an example as are all the population movements during and after WW2.
You make it sound like they upped sticks for a holiday. Israeli thugs and IDF troops simply uprooted entire Palestinian towns, stole their land and dumped the Palestinians into refugee camps. Of course they nurse a bloody grievance. They have not essentialy settled anywhere, the Gaza strip is one of the most populated places on earth , a living hell made worse by an Israeli siege. Many of them actually lived in Israel, and I'm talking in the Cities, Israel allowed some to stay and simply kicked the rest out of their homes so Jews could live there. Not surprising they might be a little out of sorts about that.
A solution must involve recognition of Israel, abandonment of old territorial claims (but some recent abuses by Israel should be reversed), a cessation of violence and in return substantial practical and economic help for an independent Palestinian State from Israel.
Palestinians already gave up 80% of the contiguous land mass under the land for peace deal and Israel has ever since continued to take the remaining 20% by all means neccasary. The only real tangible guideline left is the green line and Israel has consistently built or allowed settlers to build past that line, why should Israel be rewarded for breaking international law and the Palestinians simply abandon all claim to their indegenous land? As far as violonce goes, who's violence? Israel's because it applies constant state terroism, why country on earth would not react with violence when under oppression for 50 years? Why would Palestinians not have the right to fight back against those who would murder them in their thousands?
There is plenty of money available to rebuild Palestine, Israel will never foot the bill, your living in a dream world if you believe that. Palestine is quite capable of providing it's own decent economy when not being strangeled by Israel , with UN money, Arab state money and donors it could be a flourising independent state where people can live a decent life and not be full of fear and hatred to those oppressing them.
I'm sure the average Israeli would be happy to meet the economic cost of helping Palestine in return for cessation of constant violence and threats of the annihilation of their entire state and, presumably, the murder of most of it's citizens. Any nation under that sort of pressure year in year out is likely to behave disproportionately.
But your missing the other side of the coin, and if you think the "average" Israeli from the right would do anything to help an Arab your a long way from reality on the situation. The Palestinian led violence is moderate, almost non existant for long periods of time despite constant provocation, humilation, illegal detension, road blocks, misery , suffering, lack of basic human rights.
Solutions exist but there is a lack of will on the Arab side. Israel would do almost anything for a reasonable solution.
It has literally nothing to do with the Palestinians at all, Israel could elicit a consistent peace almost overnight. Give the Palestinians back their home land on something approaching a contiguosl and mass, get back to behind the green line or pretty close, Israel has shown consistently that it primary focus is creating a greater Israel not peace. Historically Israel has shown it won't do a damm thing to create a resonable solution.