This is an interesting point. It's always been part of the negotiation that Israeli settlers won't be allowed to stay in what becomes Palestine, and yet it seems out of the question to expel Arabs from Israel. This makes sense, of course. Arabs know they're reasonably safe in Israel and have political rights. Everyone knows that Jews who remain in the new Palestine without Israel's explicit protection will be massacred.
But think about what this implies.
Considering the recent voting pattern of Israeli Arabs in the recent general elections, it is clear that it will be difficult for them to remain faithful to Israel, in case a future war with independent Palestine arises. Sadly, it is a naked truth that Jews and Arabs can't cohabit together peacefully. If you try to forcibly cohabit them, it will end up in something very ugly. So let's face it. Israel for the Jews, and Palestne for the Arabs. Not a single Jew should be in Palestine, and
not a single Arab should be in Palestine.
I know you meant this last "Palestine" to be "Israel". (In this case I'm sure it's a typo.) I got a good laugh out of it. Imagine the Palestinians finally get a state under the condition that both no Jews and no Arabs are allowed to live there.
I tend to agree with what you're saying though, sadly. But I can't imagine such a separation actually happening.