Aside from security concerns, the 3 major issues preventing a peace deal concern settlmenet land swaps (Israelis), right of return (Palestinians) and Jerusalem (both).
Land swaps are doable, it's just a matter of deciding what land to swap, and some settlements will have to be removed - but ultimately as a practical concern settlements are an excuse and not a genuine obstacle.
Right of return is never going to happen, and there won't be a peace deal until that is dropped.
Jerusalem is a very thorny issue. The Israelis will definitely want to keep control of the Western Wall and will want their capital to be recognized as being in Jerusalem/West Jerusalem. The more religious will want to hold on to the whole city. The Palestinians want the Temple Mount/Al Aqsa and want their capital to be East Jerusalem. It would be extremely difficult to reconcile these demands, so either the city will really have to be split along those lines (seems like an invitation to disaster), one side will have to reduce their claim, or the city will have to be internationally administered. The last one is interesting and may be doable (though I'm not sure how), but I doubt it would ever happen since it would piss off the hardliners on both sides.
And of course you have Israelis and Palestinians on both sides who are opposed to any deal and want all of the land for themselves. This is a minority, though it is larger among the Palestinians.
I'm not even going to go into the messiness of the domestic politics of each side and how they are both ******** this up.
