I agree that the settlements on the West Bank need to be reined in rather than expanded ad infinitum. Note, however, that as was offered in 2000 at Camp David, Israel could remove 20% of settlers who are deep in the West Bank, take sovereignty over those settlements within a few miles of the pre-1967 lines, and compensate the Palestinians with an equivalent uninhabited area out of pre-1967 Israeli territory. Maintaining some sort of control over the passage between Jordan and the West Bank is necessary to prevent Palestinian import of heavy military equipment that the peace treaty wouldn't allow.

Presumably, once peace has been in place for long enough (a generation or two?), that could be revisited.