I know you are not suggesting that seriously, but if we were to consider that seriously, I don't it would work.
Palestine (and more concretely Jerusalem) is considered the Holy Land by Judaism, Islam and Christianity. That's why the state of Israel was created there and not somewhere else. And that's why Palestinians wouldn't receive with a lot of enthusiasm the idea of being given a state of their own somewhere else.
A big part of the conflict is a "holy war" thing about who controls the Holy Land.