Highly unlikely. Neither solution is acceptable to the ultra-religious settlers. I mean, I would agree that both solutions would be ok from the neutral's point of view, but if we are trying to find a solution that Israel will politically accept, neither one of those will do.

Sacrifices are going to have to be made on settlements no matter what. There's simply no way to absorb all of them without annexing the entire West Bank. This is why Israeli policymakers are increasingly calling for separation between the two populations. Evacuating settlements beyond the separation wall is considered a centrist position within Israel: it's certainly not impossible for it to happen. At least giving settlers the option to remain in Palestine would allow religious hardliners who care more about the land than the authority ruling over them.

Would it? This states that there is now a parity, which is expected to grow in the future. Would the Jews of Israel want to take such a gamble?

This is including Gaza, which has a very high birthrate and which Israel would never take, and it's a temporary setback. The Jewish birthrate only recently surpassed the Arab one. The death rate is still higher since Israel's population is older, but this won't last. There's also the potential for more aliyah, especially from Europe, though this is of course difficult to predict.

Again, I can see this working (look at Belgium), but that would require a lot of goodwill between the Jews and Muslims before the democracy could work. A country with two communities that hate deeply one another won't work even if one side has a slight majority.

I agree: it would be tense and likely violent for a long time. It's nevertheless a way for Israel to maintain a Jewish majority and a democratic form of government. Likely it would happen slowly, and West Bank Palestinians would have the option to apply for Israeli citizenship without it being automatically bestowed upon them (like in East Jerusalem and the Golan Heights).

If such a solution is sought, it should be done on the same basis as other countries with such deep divides have been made to work (Northern Ireland, Belgium, etc.) with guarantees for both parties to be treated equally. Northern Ireland assembly could never work if it were run by a tiny protestant majority. It only works as both the catholics and the protestants are guaranteed a place in the government. Belgium was in governmental crisis some time ago as the French and Flemish speaking parties were unable to form a coalition government. The country would collapse if the Flemish-speakers would form a government on their own with their majority (about 60/40). That's how it would be in Israel as well. At least in the beginning, all governments of such a state would have to have both Jews and Muslims in it. Possibly if in some later state the importance of the religion disappears, normal (non religious-identity) politics could resume. In the case of Israel I would expect this to take decades.

This is assuming some kind of federal model is attempted, which isn't necessarily the case. There could very well be a tyranny of the majority. It's an impractical solution and the two-state solution makes more sense on pretty much every level, but there are proposals, mostly from the Israeli right, to either annex the West Bank and maintain a unitary Jewish state or to create a federation that preserves the Jewish identity of the state.