I believe you'll find the present government is largely shaped by Palestinian agency. Clinton was very close to peace, Arafat rejected it, because Israel would not concede right of return, deciding instead to launch an Intifada.
Is it any real wonder that in those circumstances Israelis would come to believe that the true Palestinian goal is to destroy Israel? Of course, it also doesn't help that during a high profile dinner, Arafat questions whether Jewish people ever had a temple in the famous site to begin with. Nothing crank-adjacent there.
The offer was later repeated to Arafat's successor, and also declined. If it really were statehood they were after, independence, why would an offer that saw them set to receive 95% of the WB(compensated for that 5 too), and Gaza, be rejected?
It cannot be presumed that the Israeli attitude would remain constant should a different approach be taken. It's rather obvious that it wouldn't.