If I lived in Israel, I would find the constant threat of violence intolerable. Is that not common among your relatives? If so, the only option given what you've been saying is genocide. Wipe them out. Leave none in Israel, Gaza, West Bank, or anywhere else in the vicinity. I don't approve of genocide, but it seems you're saying there is no option if you aren't willing to live with the violence.

There's absolutely zero support for genocide among my relatives. They find the constant threat of violence terrible, and they do not want to live with it - but they do not want to "wipe them out," and would never support that.

While they've never put it in these terms, I think what they envision is something like how American territories are structured. No national sovereignty, so no national military or control over borders - but full local governance over internal matters. Not a state, but not "wiped out." Probably most like American Samoa than anything else (though I'm not entirely sure I understand the fine details of American Samoa's "national but not a citizen" status, so don't hold me to that).

But honestly, as one might expect when folks are trying to suss out what the "least bad" option is, they tend to be all over the place on this. I don't think they know what would work. They are, however, now convinced that Israel would never have peace even if there was a full second state. That Hamas (or whatever new equivalent group) would either immediately seize power and have control of a military, or would simply keep attacking Israel anyway - but with no constraints, since they'd have free access to import whatever they want across the borders. So it wouldn't solve anything - you create a second state, Hamas starts attacking Israel from within the second state, either Hamas is the government or the government can't/won't stop them, and then Israel has to invade again to stop the attacks. Exactly where they are now, except Palestine is a state instead of a territory.