Israel has repeatedly suggested they think they have historical and religious rights to the WHOLE of Israel.The more logical approach would be for Israel to accommodate them in the Negev (better than the Sinai), that would show that they actually intend for them to return to their homes.
The fact that Israel never even considered this just shows that all they really want is ethnic cleansing. That's more than just an "imperfect solution", it's more like a "final solution".
Their actions reflect this.