Israel is not without blame but Hamas activity just empowers Israeli hardliners just like Trump is empowering Iranian hardliners.
Israel will not allow an enemy at the gates and I can't say that stance is without reason. But you are right that their settlements harm any attempt at a 2 state solution.
But I think the Palestinians (aided by arabs at first and Iran more now) have been more detrimental to reaching a 2 state solution.
You could be right about that. I think in order to move forward, Palestine has to acknowledge that it's not exactly in a position to be making demands. My family is originally from Prussia, they had to flee all along the North Sea coast to get to Hamburg when the Russians began to close in during the latter stages of the war. Prussia of course, specifically where they lived (Koenigsberg), is Russian today, because we fucked up. We don't get to ask for it back now, claiming some shit about Bismark and the absolute centrality of Prussia to early German statehood. We fought, we lost, and they took some of our land. That's how it goes, time to move on.
At the same time though, I don't think they've ever been offered a true 2-state solution, rather it appears like something almost resembling an Israeli colony, with some of the lands gained being bound by a contractual period even. And that leads me back to the issue of Zion, and that Zion by definition isn't just a part of Israel, it's the entire thing. I don't see the Jews really budging on that anytime soon, not for several generations at least.
I'm just a hack and my opinion counts for nothing, but in a pragmatic sense for the Palestinians, it makes the most sense to launch a mass appeal to the Arab world and ask to be taken in as full citizens wherever they land. Fuck it, abandon ship. Wanna do this another 70 years?
Then Israel can have their precious Zion - the concept of which is entirely based on their 4,000 year old book of fairy tales - in it's entirety, which was sort of a necessity in the end anyway, seeing how current Israel isn't big enough to house significantly more people. Surrounded on all sides by people that will always hate them, at least for the foreseeable future if history is any indication, in god's chosen land, which for some reason isn't the Swiss Alps, the lush jungles of Borneo, or the Pacific NW, but rather a relatively small piece of dry shitty land with cool stuff like a lake in which fish can't even survive.