The problems are too deep rooted for that.
A culture that teaches their children that it is honorable to go on suicide bombings (I'm not talking about WTC, I'm talking about the suicide bombing of night clubs in Israel), which teaches its children to hate Jews (and has done so for years), is not going to be resolved by land grants or the establishment of a Palestinian state. At least not now.
I read an interesting article (which, dammit, I can't find) that suggests that if in 1948 they had named Israel "Palestine" instead, all this bloodshed could have been avoided.