The logic of the one-state solution is simple, as I see it. It is all based on a "right of return." Israel would recognize as a founding principle two rights of return. One would be for all Jews. The reasons are two: First we accept that some level of anti-Jewish politics in the Holy Lands pushed a significant number of Jews with legitimate residency claims out and kept many Jews from returning to Israel. Second, we cannot allow the Holocaust to have succeed in destroying Jewry to the extent that Jews cannot maintain a Jewish population in Israel.
The second right of return is for all Arabs (and others) who have legitmate claims of residency before hostilities broke out in '48. You grant that with the proviso that those Arabs who return must swear not to belong to any group which has as its aim the denial of the right of return for Jews or others. In other words, they must accept the constitution.
The first right of return applies to citizenship only. All Jews may become citizens of Israel but they are not entitled to automatic ownership of land, any more than somebody who moves to Chicago gets a free condominium. Arabs who prove residency are either given back their land and agree to compensate present residents for any improvements made (standard stuff in U.S. law) or they agree to be compensated at market rates for their land plus a reasonable compensation for lost earnings from that land.
Arabs with adequate means and documentation are repatriated right away. Those Palestinians in financial need or whose claims need legal adjudication go through a process for repatriation with a definite timetable, such that only marginal cases should remain after, say, five years and no cases should remain after seven years. All Palestinians are offered compensation as displaced people as the Israeli government takes responsibility for being the victorious party in the wars.
Sacred and historic places all fall under the control of the government, at which time they are preserved as found. Any restoration should be carried out by the religious groups concerned, not the government. The United Nations should get involved by creating an international treaty and group for the preservation of antiquities which would slow controversial archaeological projects to a deliberate pace.
Settlers remain where they are, assuming they can come up with the money to compensate the people whose land they "settled". If not, they move to Tel Aviv or Haifa and get apartments like everybody else. As compensation money flows in, the Palestinians get back on their feet financially as citizens of Israel. Since all Palestinians are citizens, no state of war exists and terrorists are dealt with through normal policing (albeit busy and well-armed police, one suspects).
So long as Jews are free to move and live anywhere in Israel, what's the problem that there is an Arab majority, so long as it repects the Jews' right of return and the Jewish sacred and historic places? The U.S. and the U.N. should sign a treaty to guarantee that the new Israeli constitution canot be overcome by force internally. Other than that, Israel should become a secular state.
Design a new flag and get on with life.
peace,
boddi