That's just not how peace processes work, though. At the end of the day it has to be pragmatism that determines the result, not some futile effort to punish and reward each side for what it has or hasn't done (much less punish one side for what others have done in its name, I might add). There are two obvious paths to lasting peace of a sort: the first is the old way, Israel simply finishing the job of 1948 (by which I mean the net result of 1948, not necessarily the things the various parties had in mind when starting said war), killing or expelling the large majority of Palestinians from what territory they have left, leaving some small majority in place and a far larger group as additional refugees in the neighbouring countries. Although calling that lasting peace might be optimistic in the extreme, even without taking into consideration the way it makes it impossible for Israel to maintain anything like its current levels of international support (such as they are). In short, not an option. The second path is granting the Palestinians a viable state. And while such a viable state could conceivably have its borders patrolled as you say, and might not necessarily have all of the West Bank, perhaps not even East Jerusalem, it just won't be viable if there are Israeli enclaves and settlements all over the place, among which Ariel is the most obvious offender.

If you know instances in history of similar conflicts being resolved in a way that wasn't either granting the weaker party some of its demands and a viable way forward, or simply smothering it in blood, I'd like to hear them.