Long before the term was used to refer to city apartments, a condominium was a plot of land shared by more than one country. It wasn't common and could be messy (New Caledonia comes to mind, shared by two colonial powers), but it wasn't open warfare either. After WW II, we got used to clean-looking nation-state boundaries. But this hasn't worked in Israel and Palestine, and it doesn't look like it's close to working. So let's think outside of the box and go back to the condominium idea. What if there were two countries and three geographic areas? One would be Israel, one would be Palestine, and one would be shared by both.
The 1947 UN Partition Plan led to the creation of Israel as a state but, lacking the support of the U.K., did not actually go into effect. Under the Partition Plan, Israel was to be given a rather small amount of land, but it, along with a shared Jerusalem, was home to almost all of the region's Jews. The two states would have open borders, share roads and some infrastructure, and citizens of either country could remain in place on either side. It was a plan for a peaceful coexistence -- and only would work if both sides were willing to coexist peacefully. But extremists on both sides didn't like it. And that's led to ongoing war.
This is a basic 1947 Partition Plan map, drawn in a GIS. The areas given to Israel (shown here in yellow) were predominantly Jewish at that point in time, but few Jews lived in the Palestinian (dark) areas:
Israel's settlement policy has made it very hard to draw reasonable boundaries for a simple two-state solution. Sure, they could be evacuated, but the Israelis aren't prepared to do that. What they've left behind is an archipelago on the West Bank, offering little more than a bantustan to the Palestinians. Obviously that's a no-go, and President Obama was right to say that the settlement policy has to end. But the settlements exist, some turning into sizable cities. A few that are near the Green Line could be traded for (Palestine gets other land in exchange), but some, like Ariel, jut deeply into the West Bank.
And at the same time, there are still Palestinians who want to return to the homes they or their families were evicted from in the 1947 war. Israel has been telling the Founding Myth for years, that somehow the local Arabs were welcome to stay but told to leave by evil Arab leaders. (I got that in Jewish Sunday School in the 1960s.) That is now known to be a lie. They were forced out. But allowing them to return to Israel proper, in a 2-state solution, could have "demographic consequences".
So here's the idea. Take areas that are virtually 100% Israeli, which are basically behind the 1947 borders of the proposed small Jewish state, and leave them as purely Israeli -- the Blue Zone. Take areas that are virtually 100% Palestinian, which include Gaza and the West Bank areas that aren't settled by Israelis (but ignoring "outposts" that even most right-wing Israeli government officials say are illegal), and leave them as purely Palestinian -- the Green Zone. (That'll be close to what the PA has control over now.) Those two zones should constitute a minority of the land area. Neither gets Jerusalem to itself. Neither includes the strategic Jordan Valley.
Most of the post-1949 borders of Israel are shown in the condominium, as they house most Israeli Arabs who should have some choice as to ultimate status. This is a sketch, of course; exact lines would need to be drawn by consensus:
The key issue for national ownership often boils down to land. Settlements are placed in areas where Israelis find weak Ottoman or British land tenure records. (Ottoman land tenure in Palestine was revised in the 1830s to give much ownership of what had been communal land to absentee landlords, a change not widely accepted by the Palestinians themselves.) So the Blue and Green zones are subject to their respective national land tenure systems. The rest of the area is left as the Condominium of Cisjordan. (Sometimes "Cisjordan" refers to the West Bank, but here, and traditionally, it is the whole area west of the Jordan River, just as "Transjordan" became the post-1967 Hashemite Kingdom. I can't think of a better name.) It is part of both countries. So its land tenure controversies may have to be settled by an international commission.
Here is an example of how the Blue and Green zones could be drawn, compared to the pre-1967 Green Line. Israeli-Arab areas and West Bank settlements are both in the condominium zone.
There will be no walls, and there will be freedom of movement and employment in and between all three areas. (Palestinians could work in Israel and vice-versa. No borders, no checkpoints.) All highways, railroads, and seaports will be part of the condominium, not either country, so travel need not follow special corridors. Residents would vote in and pay income tax and receive benefits like schools and health care from their own country, though, with business taxation in the condominium divided. The two police forces would have to cooperate. The two countries end up with essentially one larger, more powerful economy.
It seems a little impractical, but just not as impractical as any other proposed alternative.