Its very hard to assign any opinion or verdict on this kind of blood soaked issue and which is directly related to survival of both communities; especially being an outsider. We can't imagine what these both communities have suffered in the past 60 years. This situation is quite identical to Kashmir issue here in south Asia, where the environment of Kashmir is the worst sufferers among the rest.
But after getting acquainted with some authentic literature from the neutral perspective, It is quite clear that it was the Arab countries involved who should be blamed mainly. Countries like Jordan, Syria and Egypt have only used the refugee Palestinians just to ignite the flame more and more so they can settle their 'own' territorial dispute with Israel rather than helping Palestinians out. Be it the six day war, Yom Kippur war or any other conflict. One was more concerned about the strategic Golan heights, another was straightening its eyes on the Jordan river and the dream of Transjordan and at last Sinai and Gaza. If it had been an honest effort towards liberating Palestine and Palestinians by the Arabs - as it was advertised and publicised at that time - it must have done something good for Palestines. Even, the 3 main countries involved - Egypt, Syria and Jordan - were not united for each other's cause. There are glimpses of it in Yom Kippur War. of 1973.
On the other hand, Israel being an intelligent, scientifically and technological advance country have always got benefitted by this lack of unity among Arabs and if we see today, it doesn't look like that these Arab countries have any diplomatic front against Israel now. Saudis are even having economic collaborations with Israel. Thus, the Israel-Palestine conflict should also be remembered as lack of Arab unity and Arab failure on diplomatic as well as on War front.
So, the remedy is that the Arab countries should broker deals or try to establish peaceful relations among the two, as they also have started having a good rapport with the Israelis. They are also responsible for the 'homelessness' of the Palestinians.
Also, I would suggest one book named, "O Jerusalem" which is a historic tale of the city from the ancient times till today, written by Dominique La Pierre and Larry Collins. It is the best piece of literature, I could find on the issue. May be you have read it also.