Here's my take on it:
- Get rid of all extremists and violent factions internally (extremely hard, of course).
- Engage in intense diplomatic lobbying, and be patient. If step 1) has been achieved, I think it would be extremely hard for Israel to resist the pressure, but maybe I'm too naive. Right now, it's extremely easy to dismiss the Palestinian cause because of terrorism. What happened at the beginning of the conflict isn't going to help.