George W. Chamberlain
The first factor working against the Bush administration is the various actors at work in the region. Both the Israelis and the Palestinians are not unified within their own nations about what the conditions for peace are, let alone having much common ground between them. Ultra conservative forces within the Israeli population and government will tend to dismiss any attempt to give up land for peace or anything they perceive to be weakening Israel's position in the region. This will stop most deals in their tracks, as any compromise will tend to come with a perception of weakness for Israel. Some of this group strongly oppose the creation of a Palestinian state and such a suggestion would be very hard for Israel to swallow. Even if a peace deal can be reached, it's only a mater of time before the conservative factions of Israeli society become required for some government to stay in power, and the deal will fall by the wayside.
On the Palestinian side, there is a significant faction that claims all of Israel as Palestine. Nothing short of the destruction of the Israeli state will satisfy this faction, generally represented by Hamas. The fact that Hamas controls half of what would likely be a Palestinian state makes it extremely difficult to come up with a deal that will work for both sides. Hamas has yet to renounce violence as a means of achieving a Palestinian state, and are not likely to do so, given the history between them and Israel. In fact, a Hamas spokesman has outright dismissed Bush's efforts already. Unless Hamas can be brought on board, there will be no peace in the region.
Further, the animosity on both sides is now generations old. Once a perceived wrong becomes a generational memory, it starts to hold a mythical status that's extremely difficult to overcome. So the current Israeli population, which has been told for generations that the Arabs are out to get them believes this with all their hearts, despite the fact that the wars over Israel's existence are now a generation or two in the past. The Palestinians' struggle for a home land are just seen as a continuation of this myth and the Israeli population will find it hard to give it up. The Palestinians for their part have their own myths as well, mostly around the theme of the Israelis stealing their land from them. The existence of any Jewish settlement in the West Bank will be perceived as more land being stolen, even if settlements are dismantled and the land returned to the Palestinians. It took generations to build up the mistrust to the level it's at now, it will take generations to reverse that.
The second factor is the Bush administration itself. With the invasion of Iraq, and the saber rattling against Iran, Bush has destroyed what little reputation the US had in the region as a honest broker. This is especially true on the Arab/Palestinian side of the equation, where the US is seen as a staunch Israeli ally, which is not an unfounded perception. This makes it difficult for any proposal the Americans put forward being acceptable to the Palestinians as the proposal will be viewed with suspicion. There would likely be a perception that the proposal was designed to favour Israel over Palestine and make it very hard for the Palestinians who support Hamas to support such a deal. It will take years for the Americans to rebuild their reputation in the region, assuming they don't make matters even worse in Iraq or attack Iran in the meantime.
Further to this is the seemingly unending lack of subtlety and understanding on the part of the Bush administration. International politics in general, and peace negotiations in the Middle East in particular, don't work well in the medium and long term if a heavy handed sledgehammer approach is used. Unfortunately this is the only approach the Bush administration understands. It's how they run the US government, by bullying everyone around them into doing what Bush and Co. want. This won't work for peace in the Middle East as most of the actors in the region just won't be bullied. Those same actors also know that the Americans are over-extended militarily in Iraq, so a threat of invasion to bully the Palestinians into line is also not likely to work. For Bush to succeed, he and his administration will have to learn the art of subtlety, diplomacy and compromise - fast.
So in the end, Bush's attempt to change his legacy from the President who created a debacle in the Middle East to one who created peace in the Middle East is doomed to failure. Partly due to the nature of the various conflicts in the region and mostly due to the steamroller approach Bush takes to international relations. The conflict has been going on for generations now and it will take generations to fix. Not the one year timetable of a man desperate to change the world's view of him.