I've been thinking about the issue in terms of (armchair) game theory:

It would help to actually look at the history rather than simply completing the pattern and pretending to be wise.

Ostensibly, both parties essentially claim to be playing a a tit-for-tat strategy in an interated prisoner dilemma where the other party is a DefectBot that can't be cooperated with.

Israel has an various periods starting with Yitzhak Rabin attempted to play unilateral cooperation under the theory that this would lead to cooperation on the other end. Hasn't worked out that way.

It seems that both parties operate under a framework of "This land is ours. You have no right to be here. Anything we might concede you is more than you deserve and you'd better be grateful and accept it without question before we change our mind."

If that was an accurate description, there would be no Palestinians there at all.

Your approximation is roughly correct. I would only add that while your statement about "our land" does represent the pro-settler faction of Israeli society, I do believe there's a large double-digit percentage who are "settlement-apathetic", and whose support can be "purchased" by whichever political side offers them greater quiet and prosperity in which to lead their private lives. They vote for peace when it looks like it will work, and when they are convinced (not necessarily in relation to fact, as you noted) that the Palestinians just want to exterminate us and will try indefatigibly, they vote for military repression.

There's also an internal contradiction here: Bibi Netanyahu is an American-style neoliberal. People don't actually like that here. At all. They only really put up with it because it comes as a package deal with the "security through military action" platform of the Likud and the religious idealism of Jewish Home.

Bibi can only keep his job by maintaining quiet, but whenever he's successful in that, people remember all their Western-style everyday-life problems that are because of Bibi.

I was trying to point out that people professing to be negotiating is not the same thing as actually negotiating, and while there have been 30 years of professions of negotiations, the actual time spent making an honest attempt has been much smaller.

Yes, when your partner has no interest in honest negotiations it's hard keep attempting that indefinitely.