Two (e)state solution?

Can Palestine exist as a single soverign entity when the land is non-continuguous. The state of Michigan has a chunk called Upper Michigan that is separated by Lake Michigan (but connected by a bridge over the Mackinaw Straits). The West Bank and the Gaza are separated by Israeli land, Israeli walls, and Isareli soldiers. How can there be a two state solution when there are three separate states in the mix? I don't think it will ever work.

One solution is for Egypt to subsume the Gaza strip. The flow of goods and people across the border during the recent 11 day open border is evidence there is synergy in a region that was once controlled by Egypt. Egypt has the muscle to put down the extremists. Palestenians who wish to live in New Palestine (the former West Bank) can move there and Israel must evacuate and withdraw settlements to accommodate this.

If Paestine yields something significant (Gaza), Israel must yield something significant (illegal settlements in the West Bank). Only when there are two physical states and their be two soveriegn states.
And only then will there be (a chance) for peace.