A very interesting proposal. But in the end, both settlers and refugees, should accept settlement on land or return to villages, only a few kilometers from their intended goal (i.e. pre 1967 Israel for the Jews and the West Bank for the Palestinians). Grownup people all over the world move out of their ancestral homes all the time, to live and work dozens or even hundreds of kilometers away.
Education Minister Bennett orders increased funding for gay youth organizations (Haaretz)
from the article: Peace Plan: Trading settler Israelis for refugee Palestinians