Pragmatically, a retreat to the pre '67 borders would allow for the implementation of the two state solution ( IMHO ) but that would put a significant percentage of Israel's citizens within "crappy rocket" range and before that solution can even be considered, I can see why Israel would want to make sure there's no "funny business" going on in the Palestinian government, like a clause in their charter calling for Israel's destruction.
If I were Israel I would not sign a peace treaty with the PLO or Hamas without the organizations explicitly recognizing Israel's right to exist within the agreed borders and a removal of any statements from charters or constitutions calling for the destruction of Israel.
On the other hand, if I were a Palestinian I would probably not unilaterally renounce the use of violence to combat an often violent occupation. I would leave that to the final peace treaty, as the ANC did in South Africa.