The prison was a joint Palestine/Isreal operation for holding some Palestine militants that had been captured by the PA for crimes comitted in Isreal. The PA wouldn't turn them over to the Isrealis for trial and prison, but they where too important and too guilty to just let go."

completely wrong. The militants were being pursued by the IDF and they took refuge with Arafat in his compound, this action is what caused the IDF to encircle and beseige Arafats compound. After negotiations stalled Israel allowed the PA to hold them in Jericho with US and EU observers to ensure that they stayed there. Of course with phones and all the comforts of home to keep running their network. Apparently the IDF felt it was time to shut them down.
thanx,
bill