Actually, yes, that's exactly what the Palestinians proposed in the early days of Zionism. Here's Azzam Pasha, the general secretary of the Arab League:

"We are fighting for an Arab Palestine. Whatever the outcome the Arabs will stick to their offer of equal citizenship for Jews in Arab Palestine and let them be as Jewish as they like. In areas where they predominate they will have complete autonomy."

The Zionists were the instigators of this conflict. There is plenty of blame and horror to go around regarding what happened afterwards. Both the Palestinians and ZIonists committed atrocities (I have to say, the balance is on the Zionist side). But none of those atrocities would have happened if not for the plan to remove another people from their land and homes by force.