2 state solution with a permanent UN administered buffer zone. Jerusalem as an open city ie the Danzig Free State under UN peacekeeping and mandate with open and equal access for jews, arabs, christians, businesses and business people, travelers and tourists etc.
The Arab and Israeli states would be with original 1947/1948 borders in regards to the west bank and Egypt would annex and administer the Gaza Strip as part of their country in full. Tel Aviv and Ramallah would be the capitals of these globally recognized states, and the UN would administer border crossings, a DMZ buffer and so on, while each nation would manage their own affairs.
Internationally recognized "refugees" given official status would be given the one time choice to become Israeli or Palestinian citizens and regardless of their choice they would be given reparations payments (again under international mediation). Refugee camps would close and the people would be required to settle and do something somewhere.
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More or less this, though given Israeli distrust of the United Nations, I would substitute NATO and the Arab League (in partnership) in its place.