The Commission was frustrated by both the Israelis and Arabs, as the Arabs wanted the repatriation of refugees to be the prerequisite for any other discussions, while Israel wanted the problem to be solved in context of a comprehensive peace plan. The Commission, with delegates from the US, France and Turkey, often sided with the Arabs and spent much of its time trying to find formulas to allow many or most of the refugees to go to Israel.
I came across a very interesting article in the Palestine Post, July 13, 1949, by Jon Kimche, regarding this Commission.
Perhaps the failure of the Commission is best indicated by its failure to have done anything about the 200,000 Arab refugees who have fled, not from Israeli occupied territory, but from Arab occupied Palestine. There was no political obstacle to their repatriation. Yet they continue to sit in camps and refugee villages without anyone lifting a finger to get them back to their homes. Next there are 200,000 destitute Arabs who are not refugees but who draw assistance form the relief funds or live in refugee camps. Their problem will not be settled by repatriation of genuine refugees. What are they waiting for? In other words almost half the total problem of the so-called refugees could have been tackled without waiting on Israeli agreement for anything. It detracts considerably from the humanitarian argument used to persuade Israel to do something quick while these conditions continue unbettered.
It seems to have been well known, at least among those who followed the issue, that a significant number of "refugees" did not come from the territory controlled by Israel!
This seems consistent with research that Efraim Karsh did to count the number of 1948 Arab refugees. He calculated between 583,000-609,000 refugees from Israeli territory during the war. But the UNRWA's first count of "refugees" done at the end of 1949 came up with 962,000! (I believe that they reduced that number in their second estimate to something lower than 900,000 after accounting for fraudulent claims, mostly for people who died and who didn't exist.)
The first UNRWA report accepted that there were over 150,000 destitute Arabs who were seeking aid from the Agency who were not refugees, so it is unclear if they were included in that initial number - or if they ended up being included anyway. UNRWA and other organizations at the time also freely admitted that the Arabs were exaggerating their numbers. "Many of the needy are now actually in poorer circumstances than the average refugee because the latter receives food, medical care and some clothing, little of which is available to the non-refugee."
I had not been previously aware of the number of "refugees" who fled from areas that ended up being in Jordan or Gaza. Perhaps they left out of fear that the Zionist forces would reach them. But it looks like many of them took advantage of the free food and medical care that UNRWA provided. I don't know if Kimche's numbers are accurate - they seem somewhat exaggerated - but it appears that a large proportion of the "refugees" in 1949 were nothing of the sort.
And chances are that many of them and their descendants are still defined as "refugees" today.