You write "Hamas would first have to ...work ...countering terror." Right now, Hamas = terror. For them to turn a full 180 degrees and actually enforce a peace treaty with the very Zionist entity that they have sworn to destroy? That's a big transformation. Also, I agree with you that the WB and Gaza are two different, disconnected and distinct political entities. However, in the Arab world it is sacrilege to talk about dividing Palestine, despite its divided reality. That's just two points. You should look for what Shimon Peres has said about the conflict; the solution is known (roughly what you described above) but it's the political will and trust on both sides that's missing.
from the article: Settler council: Netanyahu's West Bank pullout plan radiates panic