[marcf]

You seem to state that Israel not annexing the West Bank is a desirable thing from the perspective of Palestinian Arabs.

Actually real annexation is desirable. Annexing the West Bank and incorporating its Arab residents into Israel proper (the Jewish settler residents of the West Bank are already considered Israeli) would be a just solution to the issue.

Then everyone would be equal under the law and the Palestinians would have a say over the future. Many of them would like to return to their homes that they left 1948:

http://en.wikipedia.org/wiki/1948_Palestinian_exodus

I think that either there is a two-state solution or a one-state solution (which can be annexation if you like) is okay. But the dual system of rights where Jewish settlers are privileged and non-Jewish Palestinian Arabs are under military rule is not something a modern Western state should be justifying to itself or others, and it something that people like yourself shouldn't have to wrap themselves in knots trying to "explain".