Your solution seems to be the de facto Bush policy. Seems like conservatives are the ones more opposed to an activist US foreign policy than liberals nowadays. How quickly we forget the mistakes of the of the last century. Tens of millions have died because diplomats have not done their jobs during times of crisis. We cannot take the course of action you recommend and seriously expect to remain a world power and be considered a world leader. Such a policy would invite global chaos.

You may of may not have a point about other arab nations unwillingness to integrate palestinians into their cultures, but the point is moot. It didn't happen and the palestinians have had a de facto nation for the last few years in Gaza and the West Bank. Even if they had been integrated would it have been any different than jews integrated into the nations they lived in during the diaspora? Would they still not want to return to THEIR homeland one day?

What I would propose Bush do now: Immediate and continuous high-level American involvement in the diplomatic process. Harsh economic sanctions against any legitimate party that does make efforts to stem the violence. Agreement that extemists will not control the peace process even if every terrorist attack can't be prevented. A blueprint for peace based on two pillars: Security and fairness. (can you remember who said that last part first?)