The most successful step taken historically by other mixed populations that constantly feuded, has always been separation and/or independent states, the exodus of a people. Which throughout history has been genocidal, or a messy exodus, or rarely a peaceful departure. The two state solution has always been compromised foremost by Palestinian division and settlements, but it would be a whole lot simpler if Israel was forcefully displacing the Palestinians.
In the Palestinian view, a two-state solution effectively means one Palestinian state and one Arab state. This is because, once the so-called ‘refugees’ are allowed to ‘return’ to Israel, the Jewish state would in practice cease to exist.