On more actual level, Arafat knows that. Because of that, he doesn't accept any solution that doesn't include full control of Temple mount and east Jerusalem. Even if proposed with it, Palestinian children's text books talk about the liberation of Jaffa, Acco and many other current and old cities where Arabs live(d).
This way everyone can have access to the holy places and if they keep terrorising you'll have the international opinion on your side.
After all, palestinians and jews are not the only people with religious interests there. It's only a matter of pride on this one.
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