A proposal for peace in the Middle East?

How do we put the wheels back on this thing?

The son of assassinated former Israeli Prime Minister Yitzak Rabin has put forward an "Israeli Peace Initiative" proposal in an effort to stimulate the sputtering dialogue between Israel and the Palestinians on the creation of a two-state solution to the ongoing instability in the region. Here is the article in Ha'aretz - what do you think?
Personally, I love Israel and I love Lebanon, Jordan and Egypt (but I've never been to Syria - I hope to go some day), and the prospect of these countries all being at peace with the addition of a free Palestine would be fantastic. Would Israel be able to deliver on the IPI? Would this plan address the concerns of the Palestinians? Would the wider Middle East and Muslim world accept this as a step towards rapprochement with the West? Would this enhance security in the region, or destabilise it further by focusing attention on Iran?

These are difficult questions, but one thing is very certain - the status quo does nothing for Israel, and instead makes its long term survival questionable, and also means it is a rather poor beacon for democracy in the region. The IPI deserves careful consideration as a possible route to a stronger and more relevant Israel and Palestine.

[Hat-tip to Ameinu]