What would you do if you, your family, and everyone you knew had their homes and land stolen and then where kept in an open air prison for 70 years? Would you want to "make peace" with your captors, or get revenge?
For peace to occur someone has to eventually be the bigger person.
Israel gave themselves this problem and they will have to deal with it.
They have to deal with it, but it is a stretch to say that they gave themselves this problem. Mattering on just where you count 'this problem' starting either Egypt created this problem (for it's blocade of the Straits of Tiran in 1950), or Jordan, Egypt, Syria and Iraq together created this problem when they attacked the Israeli forces in 1948, or probably the real beginning is when the Arabs created this problem when they started violence in response to the formation of a Jewish state in 1947. The situation we have today is in a very real way a continuation of those riots started by the Arabs, and escalated by Egypt in particular, in 1947 with both sides continuing to escalate the situation.
Let us look at these realistically.
1. Ethnically cleanse the state of Palestinians and non-jews (this is their current objective and modus operandi)
I'm afraid that this is a very real possibility.
2. Integration (Impossible while radical zionists hold power)
It is not jut Zionists that are radical and in power. The Muslim and Arab forces are every bit as radical and unwilling to allow peace. Let us not forget that they are the ones openly calling for the death of all Jews.
3. Dissolution of the State of Israel.
Let's face reality, this is never going to happen. Israel is a nuclear power and will use them before they allow the State of Israel to fall. The Holocaust has shaped their worldview, and they will never allow themselves to be in a position where something similar could happen again. They will end the world before they allow themselves to lose power.
Choice No. 1 is what Israel is doing now. Problem is that they have millions more to kill an cleanse before they succeed. If you think Israel can be successful killing millions while the world watches then you believe Israel will continue to exist.
I think eventually choice No 3 will be what happens, but only after Israel loses its protector in the US. That could take decades. In the meantime they will continue their ethnic cleansing and human rights abuses.
Choice Number 3 will never happen. They truly believe that they are fighting for their very survival, and the propaganda from the Arab world reinforces that. Even if the US abandons them they will fight on, and just become openly genocidal if needed. A people fighting for their survival will go to any lengths. So, we have to take the danger of Choice no. 1 seriously.
I can see only a few solutions to this:
1. If the one of the two sides take on a philosophy of pacifism and absolute peaceful protest. This could manage to remove the peoples will to continue the violence. I know you argument, and I agree it is a dangerous gamble, but it is better than continuing the violence until genocide. How we convince either side to give this a try is completely beyond me.
2. Genocide. The two sides keep on fighting until one of them ends up killing the other. This seems to be the path we are currently on. This is the worst possible outcome, all other solutions are better then this.
3. We move the Palestinian state away from the region. We can't move the Jewish state, it is already too powerful. This would be no easy task. The Palestinians do not want to move. No one wants them because of their history of violence. And no matter how we go about it there will be people convinced it is a prison state.
Overall, this is a very nearly impossible situation. Human history has shown that these sorts of conflict normally end in tragedy. I hope we find a way to be better than this, but I fully expect that this will eventually end in a nuclear war.