IMO, the Palestinian proposal (assuming Al Hayat's description is accurate) is a good opening point for the Palestinian negotiating position. However, it should not be seen as something that Israel should accept as is or, failing to do that, lose the opportunity for a final settlement of the historic dispute. There will very likely be differences that need to be resolved through negotiations.
In terms of territory, my guess is that the amount of territory and use of land swaps is something that both sides would find reasonably feasible. That should not be a major sticking point.
In terms of settlement blocs, the Palestinian offer excludes two very large ones: Ma'ale Adummn and Ariel (each with nearly 40,000 residents). Given the size of those population centers, they will need to be included.
The issue of East Jerusalem will also require additional negotiation. The Palestinians appear to have taken a constructive step toward greater flexibility.
Palestinian refugees will need to relocate to the West Bank or Gaza Strip, not Israel. Silence on that matter is not encouraging. Insisting that Israel admit them would be a deal breaker.
Finally, no mention of contiguity was made. I believe the Clinton proposal that envisioned an underground tunnel that connected the West Bank and Gaza Strip would provide the most feasible mechanism for achieving contiguity. But, at least in my view, contiguity should be offered. Implementation would depend on the Palestinian Authority regaining control over the Gaza Strip. So long as the Gaza Strip remains a hostile entity, implementation of that aspect should be excluded. In other words, once the Gaza Strip joins the West Bank in having reached peace with Israel, then the Gaza Strip would enjoy the benefits of peace. Until then, the focus should be on the West Bank.