The tragedy is that nobody actually wants peace enough to make it happen.
I'm fairly sure that on both sides, there are plenty of people who just want to live there in peace. Whether their next door neighbor is a Jew, Muslim or a polka dotted alien, they couldn't care less.
They just want to do what almost all people (outside those with small dicks and power fantasies) want: Watching their kids grow up in peace and a chance for increased prosperity.
Yeah, I'm overstating things a bit. I'm sure there are a certain percentage of people who aren't in power who want peace. But the problem is that the people with power mostly don't seem to want peace if it comes with any strings attached, and most of the people voting for them are too blinded by the rhetoric from their leaders to realize that both sides are the problem, not just one.
Until the overwhelming majority of people are willing to do what is needed to actually bring about peace — specifically, throwing out the people in power, running for office against them, amplifying the voices of the sane and reasonable, and speaking out constantly against abuse, oppression, prejudice, and violence, without regard to who is being abused or oppressed or being prejudiced against or committing the violence — I don't expect anything to change.
People have to not just want peace, but want peace badly enough to choose moderate leaders, knowing full well that their long-time enemies could easily take advantage of reduced militarism to do them harm. And that's hard. I get it. That's really, really hard. The tendency to "other" people who are not like us is so ingrained in human nature that even when we're taught not to do it, most people still seem to go out of their way to find different ways to do it. And that's doubly true when your actual life could be on the line.
But that's what it takes to have a lasting peace. That's the only way. One side has to take the first step by standing down, and given the lopsided power dynamic, nothing the Palestinians do will change anything, because all it takes is one bad seed deciding not to do so and killing some Israeli settler while shouting some anti-Israel chant, and Israel will send in missiles again. Israel, being the side with all the power, is the only side that is truly in the position to end this long-term, by actively choosing not to use their enormous military might against the Palestinians on an ongoing basis — actively choosing not to overreact — actively choosing not to punish all Palestinians for what are presumably the actions of a few — and instead using diplomatic means to coerce the Palestinian government into bringing the responsible parties to justice.
But that also depends on there actually being a functioning Palestinian government that isn't a branch of an extremist group. And that's not going to happen unless a whole lot of things change, and that change will take decades, and it only takes a single aggressive response by Israel to set such changes back by decades overnight, losing any goodwill that might have been built up prior to that point.
At this point, I don't see an obvious way out that doesn't involve massive third-party intervention. The Israeli and Palestinian governments have simply both done too many bad things over too many decades, creating an environment of distrust that won't be easily fixed. IMO, the threat of international action against both sides would go a long way towards pressuring both sides to come to the table in earnest and to stick to their promises for once.
Maybe I'm wrong. Maybe in the near future, Israel will stop this latest wave of attacks and will begin working to help the Palestinians rebuild (without putting Israeli settlers and businesses in the newly built houses and buildings). That would at least help repair trust a bit. The longer this goes on, however, the less likely a positive outcome seems.