Some questions about the Israeli-Palestinian conflict

One often reads about the "settlements," or the current Israeli boundaries, being obstacles to peace. I have some simple questions, to which I have never received convincing answers:

1. If the "settlements" are the main obstacle to peace, then why were there numerous attacks on Israeli civilians and soldiers as far back as 1929, with the Hebron Massacre, right up through 1967? Could they perhaps have been in anticipation of the settlements that would be constructed in the wake of the Six Day War?
2. Israel has been repeatedly pressured to retreat to the June 4, 1967 lines (pre-Six Day War). The Palestinians claim they desire a state in the Gaza Strip and the West Bank, held by Egypt and Jordan, respectively, from the end of the 1948-49 War of Independence until the Six Day War. First, why was there no clamoring for a Palestinian state when fellow Arabs controlled these territories? Why was it only when the Jews controlled them? Second, what is so sacrosanct about the June 4 lines? Let us suppose that in the wake of the 1948 war, Israel controlled all the land west of the Jordan, save for Jericho and its environs. The "June 4 lines" would then encompass much more territory. Would we then be discussing a Palestinian state on this tiny plot of land of Jericho? Conversely, let us suppose that Israel only held onto Tel Aviv and its environs after the 1948 war. Would we then be discussing a Palestinian state on nearly all of the modern State of Israel, with a tiny Jewish one? Why are the June 4 lines special?

I am eager to hear any and all responses to these perplexing questions.