The Arabs would prefer a safer Palestine than all of them as refugees. They would rather send money in than have them come out. They do not need to while Israel and to a lesser degree the international community (not just the UNRWA, the US has unilateral projects in both the West Bank and Gaza, primary development led by USAID) prop up the governments. They get to scream about injustice in public while cutting deals with Israelis in Europe. It feeds the street so the focus is on that vs. they corrupt nature of their own governments. It is also important to note we toss around the word Arab like we do Latino. There is a major difference among them. A Syrian is not a Yemeni who is not a Algerian who is not an Egyptian but they all talk shit about Israel and hate the Saudis.
The Arab nations, led probably by the GCC, could create the utility infrastructure for Gaza and probably turn a profit. But there lies 1 big issue to this that is overlooked. The brain drain. Are there electrical engineers who can maintain something built? With the Israeli control of imports, what port do you use? Ideally it would be based out of Egypt and an overland corridor, but the fear is under the current conditions the Palestinians would go south into the Sinai to escape both Israel and Hamas.
There are quite a few aggressive authoritarian states the world, including the US deals with. You could argue under the Likud Israel is led by an authoritarian party. Authoritarian does not mean a dictator. So lets start with Russia. Yep, up until Ukraine we all dealt with them, and some western companies and non-western countries we like continue to do so. India and China. Currently we can add El Salvador under Bukele, Hungary under Orban, South Africa under the ANC in South Africa, Egypt with the fall of the Muslim Brotherhood (Hamas' buddy), etc.... Shit, add the PRI in Mexico.
Creating a Palestinian state, as noted, would be a nation against a nation if they attacked. If Hamas is the leadership, well it is still a nation-state. The world would expect them to behave like one. Now they can play the Occupied Territory card all they want with no action against them. take it away from them.
Using the Kurds as an example. Post Saddam, though they do no allow Kurdistan to be an independent nation, does give them a lot more say in their day to day lives. Relations really changed. So much that the Kurds saved Iraq's ass from ISIS. Then look at Turkey. They are dicks to the Kurds, so the PKK blows up shit in Turkey. I would prefer to see an independent Kurdistan. But by giving them more of a voice and recognition (there is a US Consulate in Erbil) the animosity in less than one generation has decreased.