Enjoyed reading this. I will point out -- someone's got to pay for it. Currently, the standard of living in the area known as Palestine is much, much lower than that in Israel "proper." (Even Palestinians living within Israel have a comparatively high standard of living, as you probably know.) Iff a one-state solution or any other sort of synthesis is implemented, it will be reasonable I think for the new citizens to expect their SoL to trend toward Israel's established level. That will be very, very difficult. Imagine if the United States annexed Haiti (peacefully, this time). In that instance, since we already send aid money to Haiti and there is obviously less racial tension, it would be much easier than the situation in the Middle East -- and it would still probably fail (witness Puerto Rico's financial crisis). You may, of course, say that money is no object in the face of a humane solution. That would make you a utopian in the coinage of international relations. True? Maybe.... comme ci comme ça.
In addition to the raw population numbers this is an additional problem. Not much money was invested into the palestinian infrastructure in the past decades. However, a lot is happening lately because of large donations and projects from around the world. This is at least what I have noticed while visiting there the past few years. Even in the case of Germany after the fall of the wall things didn't turn out that good. To support eastern germany to keep up to the west, Germany introduced the "solidarity tax". A percentage of west german's income goes to the support of east german infrastructure. It did help rebuild the east but for many west germans it didn't seem right, especially not in the past 5-10 years. Even though the standard of living went up, some things are still not fine. There is still the differentiation between an "ossi" (eastern german) and the "wessi" and the majority of right-winged and racist movements originate from the deep east... I wonder what the best solution would be, maybe we can learn from past mistakes in similar constellations.