It was the best deal the PLO was ever going to see.
Jerusalem is the capital of Israel.
The "Palestinians" are just ethnically undifferentiated Arabs living in Israel.
Gaza is a good place for the last sovereign independent Arab state.
The "West Bank" is part of Israel. Back when King Hussein ruled the West Bank, there was never any move by anyone to have it be anything but a part of Jordan (other than when Israel tried its best, prior to 1967's Six Day War).
"It was the best deal the PLO was ever going to see."
Unfortunately, even the Palestinians have learned by experience that Israel's advisers (like the Quartet) will go on and on pushing, shoving, encouraging, swearing at Israel until we offer more and more in return for less and less. Why should they accept any offer at all when they know that the UN and the Quartet and everybody else will tell Israel to increase the offer until it includes Jerusalem and the coast - i.e. all of Israel?