I've always thought that the only way forward would be one that required both states that would emerge post a settlement to actively guarantee the integrity and security of the other and to defend it. In the light of current events I believe we should move rapidly to entrench this idea.
It's probably the Philip K .Dick influence in my thinking and it even sounds a teeny bit nuts to me but one idea that has potential could be for both states to randomly select some of its own people (and let's not stop with just adults, include everyone. After all no one is being that selective at the moment) by lottery. Then say if a suicide bomber from the Palestinian side kills X number of Israelis then the Palestinian authority would execute the same number of Palestinians. Naturally, this would also operate in the opposite direction of course. For every Palestinian killed in the course of this particular security operation such as Operation Rolling Blunder or whatever they are calling the current then Israeli should be prepared to execute the same number of Israelis, after all isn't Israel's long term security worth a few hundred lives? and who better to pay for it then other Israelis.
Think of it, it would be like Instant Karma! Let's beat the recession by cutting out the middlemen of mayhem. There would be no more terrorism if the state was killing its own people.