(2) - Then, we should probably work to better inform that "significant percentage of Israelis".
I take it the negotiations you're alluding to were those held throughout the year 2000, the most commonly known being those at the Camp David Summit, and later at Bolling Air Force Base, which saw the introduction of the Clinton Parameters. So, what was the proposal - the so called "Barak's generous offer", as described in American and Israeli press at the time - that Arafat rejected?
In terms of territory, the proposal called for the Palestinians to give up about 27% of the West Bank - that is, less than 3/4 of the West Bank would belong to the Palestinian state, and it would be surrounded on all sides by Israel. Within a very poorly defined time frame (maybe 10 to 25 years, maybe more), the Palestinian state would be allowed to take up to 91% of the West Bank (plus 1% coming from a land swap with Israel). However, as the Israeli activist group Gush Shalom points out, those 18% of the West Bank, the Palestinian state would eventually recover, have settlements of some of the "most extreme Jewish religious zealots" - so, forget the 10 to 25 years. Further, the percentages give a somewhat deceptive image of the reality on the ground; the territory that Israel would annex would leave the Palestinian state nonviable: Israeli settlements, land, roads and checkpoints would effectively divide the Palestinian state into several smaller, separate territories, plus the Gaza Strip on the opposite side, leaving the connection between these multiple areas to the discretion, and under the complete control, of Israel - which led to the inevitable comparison with South African Bantustans. Also, control over water resources in the West Bank would remain in Israeli hands. By the way, I should also note that settlements are typically built in important and resource rich areas, with access to farmland and water supplies - many of these areas would, of course, be part of the land annexed by Israel. In East Jerusalem, Palestinians would only be allowed to keep control of some isolated pockets of territory; the rest, including Israeli settlements, being left under Israeli control or also annexed.
Then, in relation to the Palestinian refugees and their right of return, the following quote from a Haaretz article (
http://www.haaretz.com/culture/books/a-summit-clouded-by-suspicion-1.75548) offers some information: "At two points in the negotiations the Israelis evinced a lack of understanding and consideration of the feelings of the other side. The Palestinians were aware of the fears nurtured by Israeli propaganda about the 3.7 million refugees waiting, keys in hand, to return to their homes. Even before the summit, relates Beilin, Arafat met with Clinton and informed him that the solution of the refugee problem would be one that would take into account Israel's demographic concerns (page 106). - Sensitive issues - Sher, who, judging from his book is a careful and balanced individual, writes that the Palestinians 'are not demanding the practical right of return to Israel - which, in my opinion, is not an element of their 'core position'' (page 156). What Barak proposed was the return of 5,000 refugees 'in one blow' or 10,000 over 10 years. 'Generosity' is also a matter of geography" - I believe the number was eventually raised to 100.000, the rest being afforded some compensation and help in resettling (though all these with significant caveats as well).
The proposal also called for a demilitarized Palestinian state, for Israeli control of Palestinian airspace, the right to deploy troops inside Palestine, and for Israeli control over whom Palestine could form alliances with.
The idea of the Palestinian state gradually gaining authority over their territory sounds reasonable. They haven't shown so far that they're capable of living in peace with Israel or fighting terrorists.
If you find the Camp David deal unacceptable or unreasonable, that's fine. But don't be surprised by the results of choosing continued conflict over the deal.
Forget Arafat - no one would accept this "generous" offer (to make concessions).
Negotiations work this way right? Barak insists on having A and B and would like C. Arafat insists on having B and C and would like A. Barak offers C and part of B. It reads like you think Barak should've offered Arafat B, C and part of A.
Well, Israel's new government, led by Sharon, chose never to resumed those negotiations, despite knowing (or arguably because it knew) they would lead to a peace agreement (which would in turn almost certainly mean withdrawal from occupied territory and dismantlement of most of the illegal settlements in the West Bank - political suicide then, and something still controversial today, with many, if not most, Israelis against it apparently:
http://www.haaretz.com/news/diplomacy-defense/israel-peace-conference/1.601996). Of course, technically, negotiations did continue since then, but without the same commitment, and with proposals ranging from absurd (Elon Peace Plan), to worse than those presented at the Camp David Summit (which had obviously already been rejected by the Palestinians), to not significantly better; with a few of the negotiations pretty much sabotaged, to prevent any progress. Illegal settlements and land grabs, however, suffered no such setbacks.
In general, offering the Palestinians less in each successive peace deal sounds like a way to encourage the Palestinians to accept a deal. Leading them to believe rejecting peace deals leads to more generous deals being offered would encourage the opposite.
This specific case is more complicated, of course. Barak already offered more than many Israelis would be willing to accept, and lost the next election as a result. Expecting Sharon to offer more than Barak is irrational.
From then on, Israel has often pursued an unilateral policy when dealing with the Palestinians; at least as much as it can get away with. Sorry for repeating myself, but I believe this is a good example, and is quite relevant here - as I had previously posted, when you mentioned the disengagement plan from Gaza in a previous post: "here's what the then Prime Minister Ariel Sharon's senior adviser had to say about the plan, which goes to show its intent and predictable consequences: 'The significance of the disengagement plan is the freezing of the peace process, and when you freeze that process, you prevent the establishment of a Palestinian state, and you prevent a discussion on the refugees, the borders and Jerusalem. [...] and 'The disengagement is actually formaldehyde [...] It supplies the amount of formaldehyde that is necessary so there will not be a political process with the Palestinians'. Asked why the plan had been devised, he stated 'Because in the fall of 2003 we understood that everything was stuck. [...] Time was not on our side. There was international erosion, internal erosion. Domestically, in the meantime, everything was collapsing. The economy was stagnant, and the Geneva Initiative had gained broad support. And then we were hit with the letters of officers and letters of pilots and letters of commandos [refusing to serve in the territories]', and 'You know, the term 'peace process' is a bundle of concepts and commitments. The peace process is the establishment of a Palestinian state with all the security risks that entails. The peace process is the evacuation of settlements, it's the return of refugees, it's the partition of Jerusalem. And all that has now been frozen.... what I effectively agreed to with the Americans was that part of the settlements would not be dealt with at all, and the rest will not be dealt with until the Palestinians turn into Finns. That is the significance of what we did''."
Disengagement sounds like a reasonable strategy when the other side is unwilling to make peace. Maybe the pro-Palestinian side should sponsor programs to convert Palestinians into Finns.
And, just in case the pattern isn't abundantly obvious by now, Sharon, at the end of his political career and before falling ill, apparently had plans to also conduct an unilateral "disengagement" plan in the West Bank - sounds good in theory; a "they're actually willing to leave the West Bank" sort of thing, until you look at the details. In practice, the plan called for the annexation of about 1/3 of the territory, and the Palestinians would get what was left - in effect, a worse deal than what had been proposed at Camp David, not to mention the violence that such a plan would have triggered. It's hard not to come away from all this with the conclusion that Israel is playing by the rule of "either you shut up and give us what we want, or we're going to take it by force".
This doesn't change the conclusion that the Palestinians chose at Camp David to continue the conflict. They may have been right to do so. As I keep saying, I think in the end they will win. The world loves dead Jews, and hates live ones.
(3) - "A lot of evidence supports the idea that Palestinians aren't willing to live in peace with Israel under any circumstances" - such as?
I think you might be conflating half a century of Palestinian opposition and resistance to the occupation, along with its predictable effects on the population over time, with this idea of yours that Palestinians don't want peace with Israel, no matter what - those are very different things.
They supported Arafat. They elected Hamas. They've voted for a Fatah politician who goes by the nickname
Hitler. They name schools after terrorists. They put their children in plays in which they pretend to behead Jews.
The Palestinians do not have a culture which allows them to live in peace with Jews, and they are doing nothing to develop such a culture. They're encouraging a culture of open Jew-hatred. And it'll probably work out for them.