I'm not going to get into what makes these talks different (in a positive way), because honestly I don't think they are. My sole reason for optimism is that everyone knows how to solve the conflict (at least, in a general sense) and that it's got to be solved sometime, and it might as well be now. Then again, or not.
What I'm more curious about is what the community, by which I mean Orthodox Jews or any denizens of Jewish blogosphere, is willing to give up in a final status agreement. Think of it as a negotiation exercise, the famous "getting to yes" of bargaining. One common reason for failure in any negotiation is that one or both of the parties does not have a clear idea of what they would be willing to take in a deal (i.e. the bare minimum to count it as a net win) and when they would be willing to walk away. I think it's useful to think these out, even if few of us will actually be involved in the negotiations. I'll start us off.
I'm willing to give:
a) 95-97% of the West Bank. When you get right down to it, I'd probably be willing to retreat to the 1967 lines for peace, but I don't think the Palestinians or the Americans think that's particularly possible or even desirable. I assume that what will be asked for is most of the West Bank and some land swaps in the Negev or something, which I'm also fine with.
b) East Jerusalem. It's mostly Arab anyway. (Ditto Hebron.) I'm assuming here that the final status agreement would let Israelis visit East Jerusalem (and indeed, anywhere really in Palestine), but even if it didn't, I don't think the need to control these Arab neighborhoods is enough to threaten peace.
c) Some sort of joint sovereignty over the Temple Mount. There's very little I agree with in the writings of Rabbi Avigdor Miller, but one of them is that I don't see any real pressing need for the Jews to control the Temple Mount. We're not using it, anyway. If it makes them happy, let them have it. When/if Moshiach comes, he can take it back. I'm sure the Palestinians will understand. Up until then, who really cares? Of course, I understand that I'm a huge outlier here. Most Jews will care very much, thank you. To many, it is a culmination, a vindication of the whole Zionist enterprise, religious or not. To give away the Temple Mount would be like acknowledging that the whole exercise was a mistake. For that reason, I think joint sovereignty is the absolute minimum that any Israeli negotiator can accept. And fair enough, though I think it's a bit irrational.
d) Complete independence for Palestine. None of this wishy-washy quasi-state business that Netanyahu is talking about. It seems pretty clear that the whole world is expecting a real, independent Palestinian state. A state which was not allowed its own military or control of its ports, entries and airspace would hardly be sovereign. Now, I get that people are understandably worried about what this new Palestinian state would be importing or exporting through said ports and airspace. It's a concern. But the Palestinians would never agree to a treaty where they just get some sort of autonomy without actual sovereignty, and I don't blame them. A real country has control of its own entrances and military.
e) Some sort of tunnel or bridge connecting the West Bank and Gaza. Pretty self-explanatory.
f) The removal of all settlers from the land destined to become part of the Palestinian state. While in principal there's no reason the future state of Palestine could not have a sizeable Jewish majority, I think in practice it's a bad idea. The point here is to separate the two populations. I think it's inevitable that either (a) the settlers would come under some sort of abuse from the Palestinian government or populace, or that (b) the settlers would do something stupidly provocative or (c) more likely, both. This would put Israel in a very awkward position, in deciding whether to intercede or not. The whole point here is to minimize entanglements between Israel and Palestine. We don't ever want Israel needing to decide whether to interfere in domestic Palestinian affairs.
What I need from the Palestinians:
a) A cessation of claims. This is it. They sign this deal, and they're square.
b) No right of return. My inclination is that a Palestinian right of return to Israel would not be as catastrophic as commonly assumed. In fact, many RWers in Israel have lately taken to the idea of annexing the West Bank and making all of its residents Israeli citizens, which would almost surely be worse that any conclusion to the Right of Return. However, it really is not going to happen.
What I don't need from the Palestinians:
a) Recognition of Israel as a Jewish state. I'm not even entirely comfortable with Israel's recognition of Israel as a Jewish state. But that's a different matter. From a nationalist standpoint, though, it's pretty clear why you would want this. It reinforces the whole cessation of claims thing. If the Palestinians recognize Israel's Jewish character, the thinking goes, it vindicates Zionism and serves as an indication that the Palestinians are serious about peace. On the other hand, it's ludicrous to actually expect the Palestinians to do this. First of all, there's no reason to ever assume that the Palestinians will ever make peace with Zionism. They perceive 1948, and the events leading up to it, as a catastrophe. They still see all of the land between the Mediterranean Sea and the Jordan River as the Palestinian homeland, much as Jews see it as a Jewish homeland. We can demand that they make peace with the political reality of Israel, but not that Israel was right all along. Just like no one should expect Netanyahu to recognize East Jerusalem and the West Bank as rightly belonging to an Arab homeland (just to a Palestinian state), no one should expect Abbas to recognize Israel as a Jewish homeland, just as an Israeli state.
Secondly, the Palestinians have concerns that if they recognize Israel's Jewish character, it would endanger somewhat the rights of Israeli Arabs in Israel. I don't think their concern is absurd, but I do think it's overstated. It's definitely true that Israel's Jewish character deprives its Arab citizens of some important rights. The best thing, however, for Israeli Arabs in the long run (at least, vis a vis equality) is a separate Palestinian state. The average Israeli Jew will be much more willing to incorporate Arabs in to the State if there is no real fear of the polity being overrun by Arabs.
I should probably finish by describing what I see as peace. I would be happy with even a cold peace, such as exists between Egypt and Israel. Even such a peace would largely solve Israel's security concerns regarding the Palestinians, and would be enough to normalize relations with most states in the Middle East. (The remaining holdouts, probably Lebanon, Syria and Iran, are different matters entirely. Although the prospects for normal relations with them would only be improved by a Palestinian peace.)
What about you?