I don't think it's correct that most Palestinians want what you say they want (surveys?). And even if it's true, the majority of Palestinians has no means of getting what they want. In areas under their control it's certainly hasn't been "pluralistic with equal rights and representation", it's been more like "I have a gun do what I say or else".
I think the two state solution is impossible but not for the reasons you mention. I don't think we need Gaza's courts or universities. It's also not the dependency on electricity etc. It's impossible for other reasons. On the Israeli side nobody is willing to live with an aggressive entity that wants to destroy it having their own state 5 minute driving distance from all their major cities. Gaza (the withdrawal of Israel and the rise of Hamas and their militarization) to them is proof there's no way that can work. There is no trust that the Palestinians will respect any agreement. On the Palestinian side there's no body that actually represents the Palestinians and there are armed factions that have already said they'll reject any agreement and keep on fighting.
Israel has dismantled settlements in Sinai and in Gaza. I don't think the settlements are the problem. If there was a viable option for real peace Israel would dismantle the settlements (+/- maybe some land exchange around major blocks). Ofcourse the settlements don't help because their existence creates friction and hate and they're sort of illegal.
Maybe external parties will somehow enforce a two state solution. It's kind of hard to see now. Maybe we need enough time to pass so we get social processes that take us somewhere better. Also kind of hard to see right now. Maybe Israel will expel all Arabs from the region eventually (or enough of them that they can annex the occupied territories). Also hard to see. Maybe the Palestinians will unite and reject violence as means of making political progress and that will convince Israelis to let them in as equal citizens. Also hard to see. I.e. no solution. Partly has to do with broader geo-political processes, namely China and Russia's conflict with the west. If that's resolved (also hard to see) maybe progress can be made in the middle east as well.
As for the rest, while I appreciate the civil response I don't think we agree enough on the facts to have a fruitful discussion.
Not Jewish people, a very select subset of that group: https://www.jstor.org/stable/2784649
IMO, this should've always been the solution. What has happened is akin to parents letting teenage brothers bloodily beat each other up for many many decades without properly dictating a peaceful intervention assured by a much more powerful force. The world needs to acknowledge that these two parties have shown they are unable to form a peaceful equilibrium, and it's just enabling killing to continually be hands off. Get all the world powers positions on the floor, split the difference, tell Israel and Palestine these are the borders and security arrangement, guaranteed for X decades. No more lives will be lost as long as support for upsetting that agreement (intifada/nakba/etc.) is severed. Letting two extremist right wing sides religiously duke it out over "the holy land" isn't acceptable in the 21st century.