Sorry to tell you, but #1 is right. If you study almost any history book you will see that "Palestine" up until world war 2 actually included much of Jordan and parts of Syria. No one is making this up, it is simply the real size of Palestine. The irony is that when Jordan was created it made up over 50% of Palestine and was given to the Muslims, the rest was supposed to become a Jewish country but somehow the Arabs managed to brainwash people into thinking the remaining land was 100% of Palestine and the rest should be re-divided again. They want to have their cake and eat it too :) Again, don't take my word for it, open up any decent history book and you'll see I'm right.
Army: Blast in Korean DMZ wounds two South Korean soldiers (Reuters)
from the article: Syrian official in Madrid calls for fresh negotiations with Israel