It's simple and been done before.
They must adopt the south African solution or something based on that, as it is the only way of addressing the current (and more importantly) the future problems.
Recognition must be given to the fact that the land is that of the Palestinians and they must make the decisions as to which way they go. All of the past injustices committed to uphold the old regime must be addressed
Not everyone will be happy, as happened in South Africa, but it will solve the majority of the issues and give is a solid footing to work from, which can't happen at the moment because most of the present claims are not based on reason, morality or fact. For example, the claim that "today's Jews have a right of return to Palestine because their ancestors passed through the area 1300 years ago".... Pardon???
Imagine what would be the outcome, should you or I (or anyone else for that matter) try such a thing.
The Israelis are keen to perpetrate the myth that they have a "Right" to be there and that their occupation and the injustices committed to uphold this myth, is merely a local problem, whereas their actions have bought about a boilover and incited the Muslims of the world, which has in turn led many previously moderate Muslims to Fundamentalism. From there, it is anyone's guess where it could go as the fundamentalists use this as justification to spread terror around the world to support their cause. A cause that they can legitimise as a result of Israels occupation and ethnic cleansing of Palestinian land.
The South African solution is a veiled attempt to destroy Israel. Israel is a democracy. The muslims want to destroy that. If there is one country the muslims will have the majority and after elections they are in power. Look at the muslim countries and what they did with the Jews. Not long ago after the ouster of Gaddafi a Jew came back to restore the synagogue and was beaten. There is no place for jewish religion in muslim countries while there is a place for muslim religion in Israel. That's why the South African solution sucks.