Israel still can't afford the Pal state no matters where its borders will be drawn. Because Pal state would mean to replace Israel with itself. There are plenty of arabs, who would never leave Israel in order to re-settle in Pal state, etc The whole matter is simply building momentum for next war in the region. Conversely, Pal state would never resolve any problem - it certainly would stir another round of violence, and upsurge of antisemitism elsewhere.
Abbas to urge UN to pressure Israel to permit entrance to Palestinian refugees from Syria (Haaretz)