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Your question is a good one. With a magic wand, what would we do to "fix" this perrenial problem?
I don't claim wisdom but I have my own ideas. I beleive the only path to peace is removing the seperation. One state. Those Palestinians that can prove a case in the court of law of previous home ownership, or farm ownership, or property ownership, gets their home or land back. Bilingualism is forced like in Quebec. Gun/weapons laws are draconian possibly even resulting in a death penalty. Hate speech laws strictly enforced. The area is carved into states gerrymandered so Jewish areas are over represented by law. Segregation of schools is illegal. Jewish only roads are illegal. Checkpoints are removed. Water is nationalized and allocated fairly. Jews can still emmigrate but so can Palestinians. There is a very strict seperation of temple/mosque and state. Jewish and Islamic holidays can still be celebrated, but that's it. Religious courts are illegal including Jewish and Sharia courts. Women are equals in the eyes of the Constitution. The capital is Jeruselem and whatever history put on top of the Temple Mount, stays intact and untouched.