I'm starting to lean towards a one state solution myself. Especially the more I've learned about the fact that Christians, Jews, and Muslims all used to get along in the area before the colonization of European and Western Jewish people into the area and displacement of the locals.

Give them democracy with a strong Constitution where everyone is equal, remove all traces of ethno nationalism or theocracy from the government (except for some public holidays). Integrate the security forces, courts, and other agencies of power together, enforce human rights, try to learn from South Africa, the Troubles in England, and I heard what they did in New Zealand to integrate with the indigenous worked, too. Mix up the schools so the next generation learns to grow up without the hate for the "other" their elders have.