Excellent series of essays from the indispensable Bitterlemons on the possibility of Jewish settlers remaining in place but living under Palestinian administration. This might sound like an impossible scenario at first, but frankly I don't think it's any more unlikely or unworkable than the Palestinians acceding to a final status agreement which both cuts them off from Jerusalem and divides their state into bantustans.
While it's true that a very vocal minority of settlers are hard-line Arab-hating Jewish supremacists who would very likely reject such a solution (and who in doing so would demonstrate once and for all that their motivation is in fact political, and not religious as they insist), a sizeable portion of West Bank settlers are relatively recent refugees, mostly Russian and African, to whom the Israeli government offers economic enticements as a means to getting more Palestinian land under Israeli control. These are people who may be more amenable to the idea of living under a Palestinian government as long as they feel secure, as long as their kids have decent schools, and as long as the electricity and water keep running.
I think the bottom line here is: why the hell not? Why shouldn't Jews be able to live in Palestine, alongside Arab neighbors?