"ou earlier said peace requires a 'mostly' contiguous Palestinian state. How do you plan to do that unless you split Israel into two pieces?"
Contiguous apart from Gaza, obviously. You really don't know how fractured the West Bank has become due to the settlements and access roads, do you? I've avoided using the term banutstans since the apartheid comparison is pretty ridiculous, but in the sense that Palestinians live in an archipelago of non-viable enclaves the term fits pretty well. For a State of Palestine to exist then the West Bank has to be contiguous (as in the Olmert Plan).
"There aren't that many settlements 'deep' in the West Bank."
That's simply not true. And even where the settlements aren't too large, they are connected by access roads that Palestinians can't drive on or cross except at a limited number of checkpoints, dividing the cantons even further. Add to that the huge Area C under full Israeli military control (which, admittedly, they need until there's a proper peace), and you've got an overwhelming Israeli presence that is actively making life more difficult for the Palestinians by building these settlements where ever they can and then building closed roads to connect them with other settlements and Israel. Here are some maps.
http://normanfinkelstein.com/img/photos/maps/un_westbankmap_2007.gif
http://upload.wikimedia.org/wikipedia/commons/0/0

/Settlements2006.jpg
"Yes they do this is the position they've always maintained."
This is about my question about the Palestinians being uniquely screwed out of protection by the Geneva conventions with regards to population transfers. For one, since virtually every state on Earth is a party to the convention it's safe to say that it is now a part of customary international law. That means it applies universally, even if it didn't apply to the former Mandate before (a dubious claim). But in addition to that, it's ridiculous for you to claim that the Palestinians claim that they aren't protected by the Geneva Conventions. Quite the opposite. They do claim that their treatment by Israel is excessively harsh by comparison to similar groups (I don't really buy that), but never that they've got it so bad since international law doesn't apply to them. That's ridiculous and anthoer strawman from you.
"The Palestinians can unscrew themselves at any moment, by accepting an actual two-state settlement. They've yet to do so. But yes the stupidity of the Arab states in the past - launching an offensive war after illegally occupying the West Bank and Gaza, and losing spectacularly in 6 days, has put the Palestinians in a bad spot."
All true about the Arabs. But the Palestinians need a state worth accepting. If the offer is a collection of non-viable enclaves then there's no point in accepting, since it means that Palestine would be nothing but a dependency of Israel. Olmert's plan would have worked if the bum wasn't about to be run out of office, giving Abbas every incentive in the world to hold out for an even better deal, considering how much better Olmert's offer was than the one at Camp David. And then the Gaza War made talks politically impossible for Abbas, regardless of whether the war was necessary or not.
The Jews have a right to live in their ancient homeland. Israel has a right to exist. But at the same time Israelis cannot simply steal land in the occupied West Bank from its Palestinian owners and continue to build settlements which make life impossibly difficult for the ordinary Palestinian people. Israel needs to tear up almost all the settlements, and compensate the Palestinians for the land taken with land from what is currently Israel. Israel is giving up a lot, but so are the Palestinians since they'll have to give up on the Right of Return in any peace deal. In principle this is even what Avigdor Lieberman supports! You're holding on to an outmoded view that is actually quite dangerous for Israel's security. Things can't continue as they are, and a real war in the area would be devastating for the entire world.