To find peace in the middle east we have to carve it up.
There IS peace between Egypt and Israel, for example. It took a lot of work, and a constant cash flow to both nations from the US to make it happen.
There IS peace between Jordan and Israel as well.
Peace COULD occur between Syria and Israel, but that will take much longer.
Lebanon needs to be rebuilt. It was once a vacation destination for much of Europe. Swedish hotties cavorted on the beach while billions of dollars went through the banks. Getting Syria, Israel and Palestinian interests aligned in a desire to rebuild Lebanon would be monumental - but it is possible.
We need to stop talking about peace between Israel and Arabs, and instead focus on peace between Israel and individual Arab nations. This includes Palestine.
Peace COULD occur, but it will take a decision regarding Jewish settlements in the occupied territories. A simple solution would be to finish the wall, close all settlements, and work from there. Keeping Israeli troops around who protect settlers and private settler roads does not lead to a good situation. The occupation by Israel does not work, has not worked, and needs to be ended. It costs Israel too much in military supplies, and it does not accomplish anything in terms of a peace movement.