My projection: (this is what the point of the thread is ?)
The Israelis and Palestinians will realize that due to the reality of the situation on the ground, they should unify into one state. Hardcore religious and zionist Israelis will oppose it as will Hardcore Palestinians, but the majority of the people will see the merits.
The new nation will protect the rights of all citizens regardless of religion. Voting rights will be allowed for all. The influx of Israelis capital and Palestinian labor as well as the growing number of high educated israelis and palestinians will lead to an economic boom that will make the middle east jealous. Movign beyond oppression, hate and racism, the new joint-nation will be the envy of multi-national regions throughout the globe.
Over time, cultural engineering by the new state will attempt to morph the israeli and palestinian identities into one. Terrorism and hate will be a thing of the past.
The new state will be called: The Palestian-Israeli Republic or PIR (Im sure there is a better name

)
The flag will be a something like this: (sign on the building, but the crescent will be green )
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Now, why do i think this:
I believe that businesses and financial interests will favor this. I believe that the common israeli and palestinian will favor this. I believe that every year more and more hateful individuals die and more and more young people able to trust and love each other grow up (when israeli bombs you , this kind of works backwards)
Basically i believe that people will move beyond, "This is a Jewish homeland" (LOL) and "They took our land"
And realize that unless they live together, the killing will never stop.