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I don't see an independent Palestinian state developing anytime soon. Plus there is no real gut desire out there for one on either side despite the public policy statements to the contrary. If one is established it will merely be an appendage of the greater Israel. It is a case of tokenism at its worst...merely to soothe the diginity of Palestinian refugees and lefty intellectual around the world.
The reality is that the level of mistrust between Arabs and Jews is simply too great today to bridge and all the work done in the 1990's to build trust is now gone. Another whole generation of citizens will have to be born to replace the current status quo.
The last generation of terrorists, the PLO, made headlines from the 1970s - 2000 but their objectives were political, even military. Everyone sort of understood where they were coming from although their methods were, at times, brutal like blowing up airplanes, Munich, etc. They were also secularists and did not give a whit about the return of the Caliphate, Islamic law, etc. After 40 years of fighting in the shadows they earned some level of international recognition for their cause and they found themselves at Camp David, Madrid, Oslo, a UN seat and other symbols of legitimacy. Now the terrorists are primarily religious driven and really don't care about political solutions and negotiated settlements. They think in terms of martyrdom with 71 virgins awaiting them, drinking wine and eating pork for all eternity. Why should they care about legitimacy in this world when eternal reward awaits them if they can somehow take bullet from an Israeli. Israel is facing an irrational enemy that that has no worldly objectives other than achieving their own destruction.