Check out JPost correspondent Douglas Davis, writing in the Spectator on the "right of return," the Israeli fence/wall and why each is so important:

Offered an independent Palestinian state in virtually all of the West Bank and Gaza, a share in Jerusalem and a limited return of refugees to Israel, Yasser Arafat’s response has been the violence that has convulsed Israel for more than three years. The frequent complaint of the West’s political and media classes, that Palestinian violence is a function of ‘frustration and rage’ over the lack of progress to peace, is ill-founded. On the contrary, the most intense spasms of violence have accompanied the most positive movements on the diplomatic front.
The reason is that a large body of Palestinians have still not reconciled themselves to the two-state solution. More specifically, they have not, despite the Oslo accords, come to terms with the existence of a Jewish state on what they call holy Muslim soil. The Palestinians remain as opposed to the existence of Israel today as they were when the Peel Commission recommended partition in 1936 and when the UN voted for it in 1947.
In Israel, by contrast, successive leaders, including the much-demonised Ariel Sharon, have warned Israeli voters to prepare for ‘painful concessions’ if a real opportunity for peace presents itself. No Israeli doubts that such ‘painful concessions’ would involve Israel’s evacuation from most, if not all, of the West Bank and Gaza Strip to make way for the birth of Palestine.
The reason the Palestinians have not run with the ball is that they are convinced that they have far more to gain by playing for time. On present trends, say the demographers, Palestinians will outnumber Jews in the area between the Mediterranean Sea and the Jordan River — Israel, the West Bank and Gaza — by 2020. At that point, Israel will cease to exist as a democratic and Jewish state.
Why accept a truncated two-state solution in the West Bank and Gaza when the one-state solution down the road will deliver Israel, too? Not by suicide bombers or conventional military means, but by the simple expedient of eroding Israel’s Jewish majority. All the Palestinians have to do is breed for victory: make love, not war, and transform their womenfolk into what Arafat calls his ‘biological bombs’.
...When I raised the one-state idea this week with a senior Palestinian academic who has been in active contact with Israelis for years, he responded with a curious question: ‘Do we really need another state between the Mediterranean and the Jordan?’ He went on, ‘It would be much easier for the Palestinians to fight for equal rights rather than for another state.’ If he accepted a two-state solution now, he said, it was simply to ‘accommodate the Zionist desire for a Jewish state, not because I believe it is just’. As if Jewish national aspirations were uniquely illegitimate.
Few events have so galvanised Palestinian anger as Sharon’s decision, supported by an overwhelming majority of Israelis, to construct a fence roughly along the Israel–West Bank divide. From Israel’s perspective, the fence is designed simply to separate the populations and keep Palestinian terrorists away from Israeli throats. But while Israel insists it is an interim security measure that does not prejudge the outcome of negotiations, the Palestinians are convinced that the fence represents a unilateral Israeli attempt to impose a border, seal the two-state solution and destroy the goal of achieving a demographically driven one-state solution.
...The problem for Israelis, even those who might otherwise have been inclined to accept the Cook/Hain concept of a binational state, is that there is no precedent for secular democracy among any of the existing 21 Arab states. Nor does the Palestinian Authority give cause for hope that its own future state will deliver a democratic, pluralistic utopia. Rather, it stresses ‘the Arabness of Palestine’ and the intrinsic place of Palestine within ‘the Arab nation’ (it is difficult to understand, in light of such language, persistent Palestinian complaints of Israeli ‘racism’ when it seeks to safeguard its existence as a Jewish national home).
If the Palestinians today pay lip service to the notion of the two-state model, it is as a tactic, a matter of appeasing international supporters. The ‘phased plan’, explicitly enunciated by Palestinian leaders in the past and spoken of in more nuanced terms since Oslo, stipulates that whatever territory Israel surrenders will be used as a platform for further territorial gains until the ‘complete liberation of Palestine’ is achieved.
The Palestinians remain wedded to Arafat’s notion of a ‘biological bomb’ and committed to the ‘right of return’ for the refugees (along with unlimited generations of their progeny) not only to a Palestinian state in the West Bank and Gaza, but also to Israel itself. They know, as Israelis know, that it is a recipe for Israel’s destruction.

Also, check out Steven Den Beste's expert deconstruction of Hamas' latest threats. It's too long to excerpt, but worth the read.