Two articles in the mainstream Arabic press about yesterday's "Nakba Day" prove that as long as Israel exists in any form, Arabs will not accept it. No matter what.
The first comes from the popular pan-Arab Al Quds al Arabi site. The title is all you need to know: "The 64-Year Occupation of Palestine." If the "occupation" is 64 years old, that means that even if Israel accedes to all the current PLO demands, there will still not be peace.
The second comes from Jordan's Addastour site, which is titled "Palestine Nakba is a dagger in the side of the Arab nation." It goes through a ridiculous history lesson (did you know that one reason Arabs fled Palestine is because the Jews stole their water?) but the main point is that Israel is a dagger that must be removed for the Arab people to be healed.
This is a critical point that Westerners cannot quite grasp. The conflict is not solvable. The Arab masses, brought up on generations of hate, are not going to accept Israel peacefully. The best anyone can hope for is a series of tactical truces and long term management of the conflict. And it is Israeli strength, not Israeli concessions, that is a prerequisite to having the Arab nations (including the PLO) grudgingly accept that Israel cannot be defeated and learn to deal with it.