The problem with that argument is that Palestinians are not "Generic Arabs". They have their own distinctive identity and national character, and they never did anything to merit dispossession from their ancient homeland.
There is no way to end this conflict without acknowledging that, however the lines are drawn and whichever number of states there are, all of the following propositions must be accepted by all parties to the conflict.
1) Neither Jews nor Palestinians are alien to these lands;
2) Both have deep roots IN these lands.
3) Both have the right to live in peace, safety and freedom on these lands, therefore
4) Neither can be ever be asked to depart these lands or live subserviently to the other on these lands.
Seems like everybody should be able to accept all of that.