Regarding Nataniahu you might be right. Even you could add Barak. However, Palestinians themselves should be balmed for losing options when they were real. Of the things you mentioned as non negotiable there is one logical one. Refugees will never return to israel. Palestinians can grasp this demand as asssuming defeat. However, the other way around, is the same. Next, Jerusalem or part of it at the end of the day will be also the capital of the Palestinians, and the Mount of the Temple will also be shared. It will never be Palestinian alone. The question of the water is not a problem at all. So what happenes ? Israelies are totally accurate in the understanding that for palestinians the acceptance of any type of jewish soverignty in the region is "surrounder". So ....they should give up because they have no rights to demand something different. They believe they have rights, but they have not.
Policeman killed by blast in Bahrain village, interior ministry (Reuters)
from the article: Palestinians under world pressure not to declare state unilaterally