I think that what's going on here is that Bush is challenging Abbas. Don't pay too much attention to what Bush says - that's all diplomatic schmooze.The real deal, I think, is that Bush says to the Palestinians: You want a democracy, you can have it. But in his heart, I don't think Bush thinks they're capable of it.
The probable scenario is that they will form a Palestinian State out of Gaza and perhaps some of the West Bank, things will be quiet for a short while, but sooner or later, and probably sooner, the new Palestinian state will attack Israel in some manner.
Then, it will not be a case of Israel being attacked by an
"occupied people seeking their independence from their occupier", but one sovereign country attacking another,
meaning, an act of war. At that point, Israel will respond
accordingly, as the US did on 9/11, with Bush's support, and
inflict massive retaliation on their Palestinian neighbor.
While that line of thinking is popular on FR, imo it's falacious.
Attacks will be by terrorist groups operating from the West Bank and Gaza, not the PA police (same people, two jobs).
Israel was attacked by terrorists based in Egypt for years. When Israel responded in 1958, the world, including the US, screamed.
Same thing in Lebanon, terrorists attack, when Israel entered Lebanon, the world screamed. The PA won't be any different.