The problem with the idea of integrating Palestinians into Israeli society is that if all the Palestinian refugees are integrated into Israel, Israel will cease to be a Jewish state. There are approximately 5 million Jews currently living in Israel, along with roughly a million Israeli Arabs and a hundred thousand or so Christians. There are about 3 million Palestinians currently living in the West Bank and the Gaza Strip. If the right of return is granted(which would have to happen to integrate Palestinians into Israel) I am sure that the number of Palestinians returning to Israel would increase somewhat, perhaps to the point where Jews would cease to be a majority. Israel was created as a Jewish state, albeit with a (mostly)secular government, and anything that could put Israel's status as a Jewish state in jeopardy is going to be opposed by Jews the world over. This is why integrating the Palestinians into Israel won't ever happen - it would fundamentally change the Jewish nature of Israel. I think that the only hope for peace is some kind of division of land. I hope that at some point the US will step in and make an effort to help the peace process, and perhaps offer the Palestinians financial aid to encourage them to accept an offer similar to the one Barak made at Camp David. However, as long as both sides are so willing to resort to violence, and unwilling/unable to curb the hardliners on each side(Hamas, Islamic Jihad, the Jewish settlers in the West Bank), I see very little chance for any sort of reconciliation.