2 states are unviable. There needs to be one inclusive state for all people of the region with serious reparations for the Palestinian people. Dual citizenship if people want it and 2 official langauges.
Peace is the only way forward. It happened in South Africa and Northern Ireland. It can happen.
And I don't see hardcore al-Islamiyyun living side by side with jews. This would be a powder keg right from the get go, just look at how they treat each other for years now.
A Belgian model might work. Two or for completeness' sake three (Christians) federal entities, joint army, separate police forces, give municipalities the right to switch who they belong to by 2/3rd majority. Jerusalem becomes federal territory.