Framework

Regardless of my (secular, Diaspora) own inclinations (a duly, fairly negotiated two or three state settlement) I suspect the actual outcome to the peace process will look like this:

a) Completion and fortification of the security barrier, akin to annexing an additional 7%-ish of the West Bank.

b) Declaration of the barrier as a border. There would be total withdrawal from beyond the border with the exception of necessary and duly administered security coordination. Functionally, this means that most of Jerusalem would be Israeli.

c) Settlers who do not repatriate and are beyond the Wall become Palestinians. The Right of Return would not be recognized. Very significant aid and assistance would be available to any Arab Israeli wishing to move to Palestine.

d) A massive aid package to the PA in the West Bank.

e) Economic + security coordination and cooperation with the PA in the West Bank, along with massive EU/Jordanian/American influence and dozens of Rawabi projects in a sort of Marshall Plan in exchange for implicit recognition.

f) This last bit could be a bit pie in the sky, but: passage of a formal constitution encompassing the existing Basic Law and defining the borders of the State of Israel and its character as a Jewish nation-state (I'm very curious as to opinions on this.)

Essentially, something like what Michael Oren or Ari Shavit has laid out. I think it happens sooner rather than later. I think it goes without saying that the coalition that enacts this likely won't include Jewish Home or Yisrael Beteinu (maybe even not Likud, considering the rank and file?) I think there's some European protest, but not a ton. I think Americans would largely support this, despite the lack of a peace process imprimatur. I don't think relations with Jordan or Egypt would break down. It's a crappy but likely livable solution (akin to South Korea?)