Most people react to current events as they appear in the media. And the powers that be (who happen to be politicians whose careers depend on the Public Opinion) are taking popular stances while implementing the agendas of those who stand behind them and pay for their electoral campaigns.
So, from one side the conflict is seen in terms of the "post-1967 occupation" and the various instances of "mistreatment" of Palestinians in the course of that occupation. Hence the proposed solutions are seen in stopping the occupation, and better treatment of the Palestinians, or proclaiming the pre-1967 Gaza and West Bank a Palestinian state. While from the other side the conflict is seen as part of the Global War on Terror and the solution is seen in destroying the "terror network" the existence of which is seen as the source of the conflict.
But the conflict existed before 1967, when the West Bank was part of Jordan, and Gaza of Egypt, Hamas and Hizbullah did not exist and Iran was ruled by the pro-western Shah. So, even, if it were possible to restore the situation to what it was before 1967, and to proclaim Gaza and the West Bank a Palestinian state, the conflict would still be unresolved.
But the issue is very simple, it is not about Jews being Jews or Arabs Arabs, it is about a group of people being forcibly expelled from their land and houses within the past 60 years. And it is this what the Palestinians had been fighting for, regardless of what slogans and ideologies had been used by their various organizations. And the conflict could have been resolved a long time ago, and can be resolved now, by recognition of the underlying cause, and compensation and resettlement.
This is the only just and workable way to resolve this conflict, and is in the best interests of even the most "Zionist" Israelis, the most bitter Palestinians and even the slimiest of politicians. But everybody, the fighting parties, their backers and the on-lookers (the International Community) (left, right and centre), are taking political stances, rather than dealing with the substance of the case.
So, the conflict will continue, until its effects become so intolerable for everybody (the International Community) that there will be a general recognition for the need to abandon politics and to start establishing workable institutions of international and supranational law, based on simple classical Justice. Some of such thinking was noticeable after World War II, which gives some indication of the scale of carnage required to make people think rather than reactively protest or hit out at the perceived source of threat.