America gets to say it is successfully promoting legitimate Muslim and Arab interests. Hopefully, this will buy enough time in the short term for us to conclude most of our military operations in Iraq and Afghanistan without having to fight elsewhere at the same time. The Left, of course, sees this as this first step in the peace process. The Right - the realists - don't. Or rather they consider that outcome to be only a remote possibility.
Israel is trading Gaza and the northern West Bank for Jerusalem and the settlement blocks around it. The Arabs certainly don't like that...but that's what they're going to get. That and the Wall. The rest of the world will agree to the trade...which is crucial. The fighting will then be over the remainder of the West Bank. In the short term it will become a Palestinian state...but, as I've said, it will not be viable and there's a good chance the Israelis will get it back, evicting the Arabs in the process.