I don't know whether or not Eyal Arad's latest trial balloon reflects the prime minister's thinking, though it seems likely. But it's hopelessly naive to think that Israel has the power to unilaterally determine its permanent border. A border by definition has (at least) two sides. So long as the Arabs refuse to accept our self-declared border, it will remain up for grabs.
Take the Golan Heights, for example. Or eastern Jerusalem. No country recognizes Israel's sovereignty over them, despite decades of formal annexation to Israel. And no country will until our enemies do. Until such time, they're on the negotiating table, whether we like it or not.
Unilateral withdrawals, aside from destroying Israel's military deterrence and undermining those among the Arabs who support a negotiated agreement, simply cannot achieve the objective of finalizing Israel's borders. The Arabs do not recognize the Israel-Gaza boundary as an international border, and, following them, neither does the United Nations or any individual nation.
If, as Arad suggests, Israel adopts "continuing unilateral disengagement" as a long-term policy, we will only confirm to our enemies that we plan to salami-slice ourselves out of existence. That may buy us some quiet as long as the slicing continues (or it may not), but it certainly won't bring us long-term security and stability, let alone international recognition of our "permanent border".
A final note: While our allies reluctantly accepted and eventually applauded our unilateral disengagement from Gaza, they would not have done so had the plan included the annexation of areas of territory adjacent to Israel. A "disengagement" plan for the West Bank such as Arad describes, which includes the annexation of settlement blocs, would not even achieve the support of our closest allies, including the Americans. (Bush's letter about settlement blocs refers to the position the U.S. would take in the context of final-status negotiations with the Palestinians; the U.S. has never accepted Israel's right to annex settlements unilaterally.)
Israelis have an apparent infinite capacity to believe that this next plan will finally solve our problems. Will they ever learn?