1) Give them their own state. This is difficult for quite many reasons, and Israel (by which I mean the current government) doesn't want that
2) Give them full citizenship rights equal to Israel's citizens, make sure they have a proper minority representation, and let them participate in the regular political processes. The current government certainly doesn't want that, and I have no idea what part of the Palestinians would want that.
3) Continue to treat them as sub-human, and deal with the consequences of the hatred that fosters. That seems to have been the "strategy" before October last year.
4) Try to exterminate or exile them, or at least decimating them to such an extend that the problem becomes smaller.
Since 1) and 2) are (again, from the perspective of Isreal's government) undesirable, and 3) has stopped working, 4) seems to be their current strategy.
Speaking for experience from some relatives, the immigration laws for people of jewish faith and ancestry were nigh insurmountable if you came from african, arab or middle east countries and pretty much just nominal even in recent times for those who had even a remote connection but came from the US and the UK.
I have the feeling they are jewish the same way Henry IV was a Catholic when he said "Paris is well worth a Mass".