Has it got better or worse over the last 6 months following 7/10? The Palestinians have not benefited from Hamas and will never benefit from Hamas and currently more than ever are dying. Why is it not a sensible choice to therefore at least remove Hamas from the equation given the circumstances? I'm not interested in the last 70 years, repeating what has already happened makes no difference to how to end the current situation.
I don't see what else works, Israel is under attack at its borders and it probably isn't going to think towards something like a two-state solution right now (if ever). The only way to change that is to remove the aggressors or reduce the power they hold, or hurt Israel's ability to defend itself through sanctions or arms sanctions which is clearly going to an extremely difficult conversation.
If the attacks stop and the violence stops then there's a greater chance of something good happening because the west will be more inclined to pressure Israel to come to the table. The west is however less inclined to do something whilst its ally is effectively at war and even more less so whilst hostages are held in Gaza, the place where a Palestinian state could potentially be formed...