@gf - "Neither side will realistically cede half to the other. So why not make the city separate?"
If Israel falls under severe international pressure from the US (not from the EU or the UN, who knows what they're doing with this mess so far) to split between East and West Jerusalem, they'll do it. The border will be at the wall. Given my time in Berlin and my inherent hatred toward the USSR for building that wall in the first place, I'm not terribly proud of proposing that solution, but it is what it is. Israel is one of the biggest economies in the world and one of the most progressive ones at that, and there is absolutely no way in the world that they are going to cede control of Jerusalem even if the UN declares it international territory. Hell, they haven't yet. The only way you're going to get Israel to back out of East Jerusalem is to leave West Jerusalem under their control under the condition that the apartheid-esque conditions change. They get the tourist dollars of the Old City, they move out of the Palestinian half of Jerusalem and allow it to be established as the new capital of Palestine. Split the two countries. An international city would just end up a long-term mess.
Regarding Gaza, I somewhat agree. It certainly shouldn't go back to Israel, it certainly shouldn't be ruled over by Egypt, and it certainly isn't working out in the hands of Hamas. For the sake of the people living there, the UN is probably a workable option. I doubt the Knesset would agree to that, though. There may be a few that do, but a few doesn't get the job done. Israel already has issues with how the UN has handled their presence in Gaza, so without offering some other concession to Israel in exchange, that won't happen with their approval. I don't think Hamas would agree to it either unless it was an intermediate peace discussion, i.e. they've already sat down and are working productively with each other as opposed to the usual one-day peace.