Half drunk, that film does put forward a 1 state solution. You recommended peled's book earlier which i bought but haven't started reading yet - still working my way through ghada karmi (who also argues for a1 state solution) and Alison weir. The issues you raise are all valid wrt having to sit down and work out the detail and as you and PJ note, there's little evidence of / success at that to date. One view I recall (though i cant remember where it came from nowl. Perhaps it was peled?) was that if there is genuinely to be peace, it will require major changes in attitude, and that could well come through starting over and looking seriously at a 1 state solution; it is very unlikely to come through the 2 state option which seems at a complete impasse for whatever reasons.
I am unsure of the way forward but as an atheist i, personally, feel really uncomfortable with the notion of a religious state; it doesn't sit well, IMO, with the notions of equality of rights or freedom or democracy. I have no objections to people living their lives as they see fit, but there are just too many tensions when it comes to ensuring and imposing regulation and control. Instead of nurturing tolerance (so ironic really), religion seems to breed divisions.
For what it's worth, i agree with all the points put forward by PJ and though I agree Israel is currently point blank unwilling to budge on any of these issues, (the article you linked to re international law just typifies this spoilt brat attitude) I'm not ready to say they always will be. If the Palestinians can maintain hope despite their desperate lot, we ought to be able to. But more practical than that, I'm not up to, I'm afraid. All I've got to bring right now is the hope that the groundswell of public opinion will eventually gain sufficient momentum to lead to genuine change.
Then again, having said that, i am afraid that, as has been documented in relation to the worldwide impact of the Israel lobby throughout the 20s, 30s and beyond, with its underground activities (raising finance, gunrunning for the Zionist terrorist organisations, pressuring politicians and public figures of all descriptions to push through measures favourable to Israel, such as the UN resolution), any ground made up in the search for an equitable solution will be undermined through similar behind the scenes agitation.
Just cos it's not complicated, doesn't mean it's easy...