Once the Palestinians sign a treaty, it will be hard for others Muslims or otherwise to interfere. If a settlement is reached, I believe a lot of the tension in the ME will end as the Isr/Pali conflict the the major source of tensions.
The 1967 war was started by Israel as a preemptive war in retaliation for a blockage imposed by Egypt similar to the blockade that Israel imposed on Gaza and caused the unfortunate firing of rockets into Israel and then this barbaric attack on Gaza.
International law does not allow land occupied through war to be annexed. Law of the jungle may allow that. Not sure which law you prefer but certainly my preference is international law.
A negotiated settlement where Israel end the occupation of the Palestinian territories in exchange for security guarantees for Israel is the only viable peaceful option. Otherwise, this conflict will continue which in my view is not a favorable thing for Israel. As you know, Israel depends on other countries for its survival financially and militarily (hardware etc..). AS PM Olmert said a couple of months ago, the sooner a treaty is reached the better it is.
Israel did not give back the Temple mount, it is still under its control. Jordan is involved in a minor way in its management.