Last week's massive bus bombing, which killed 21 people, most of them ultra-Orthodox Jews and some of them children, may turn out to be a defining moment in the Israeli-Palestinian conflict.
It signaled the collapse of the hudna (cease-fire) declared by Palestinian terrorist organizations in late June and generated potentially far-reaching Israeli, American and Palestinian policy reappraisals.
Israel launched a string of targeted strikes against terrorist leaders, warning that it would no longer distinguish between political and military echelons of any organization waging terror, including Palestinian Authority President Yasser Arafat's Fatah movement.
The United States exerted unprecedented pressure on the Palestinian Authority to unite its armed forces, collect illegal weapons and smash terrorist organizations before a new cycle of terror and reprisal spins out of control.
And the Palestinians made some tentative moves against terrorists, while urging a new cease-fire that Israel suspects is designed to tie the Jewish State's hands and avert the need for the Palestinian Authority to take more tangible steps against groups like Hamas and Islamic Jihad.
Officially, Israel and the Palestinians continue to back the American-initiated "road map" peace plan. Indeed, both parties claim the breakdown stems from the other side's failure to implement its obligations under the road map, and both maintain that their new moves are designed to force more scrupulous execution.
Some critics, however, say the flaw is not in the failure to implement the road map but in the plan itself, and they are calling for a new approach.
Former Israeli Prime Minister Ehud Barak, never a fan of the road map, has revived his call for a unilateral Israeli withdrawal from the West Bank and Gaza Strip.
Martin Indyk, a former U.S. ambassador to Israel, has reiterated his proposal for an American trusteeship over Palestinian areas.
For different reasons, both say the road map in its present form will never work.
Still, Israel remains committed to the plan -- and aides say Prime Minister Ariel Sharon hopes the renewed policy of targeting Hamas leaders will help get the plan back on track.
Critics charge that the targeted killings are a deliberate ploy to undermine a peace plan Sharon never wanted, but his aides claim the strikes make clear to the Palestinian Authority what will happen if it continues to evade a confrontation with Hamas.
Moreover, Sharon aides say, knowing they are targets could convince Hamas leaders to suspend hostilities. If they don't, Israel believes, eradication of the top leadership will weaken the movement's ideological and organizational coherence.
The policy of striking at Hamas leaders has revived the debate in the Cabinet and the defense establishment over what to do about Arafat -- who, Israeli officials say, is every bit as much a supporter of terrorism as the Hamas leaders, and more of a thorn in the side of Palestinian Authority Prime Minister Mahmoud Abbas.
Foreign Minister Silvan Shalom and Finance Minister Benjamin Netanyahu support expelling Arafat, and the government is preparing an "Arafat file" so that it will be in a position to explain any action it may decide to take against him.
Several months ago, Amos Gilad, a top adviser to Defense Minister Shaul Mofaz and an expert on Arafat, convinced Israeli leaders not to expel Arafat, arguing that Arafat would be more dangerous abroad than confined to his headquarters in Ramallah. Now, however, Gilad says the option of expelling Arafat should be considered seriously. Gilad argues that international conditions have changed with the road map, and Arafat's disruptive influence has grown since Abbas was appointed.
Barak, however, argues that recent events prove that with or without Arafat, there is no peace partner on the Palestinian side. Therefore, in Barak's view, there is no point to pursing the road map. Instead, he says, Israel should complete its security fence along the border with the West Bank as quickly as possible and then withdraw behind it.
At the same time, it should announce a generous peace plan of its own that would show that the fence's route -- which cuts into the West Bank at several points to surround major Israeli settlements -- is not a land-grab but purely a security arrangement until the Palestinians are ready to talk peace.
Moreover, Barak and others argue, the road map offers the Palestinians statehood before the sides have settled the key issues of borders, Jerusalem and refugees -- something that's "very dangerous for Israel," Barak said.
Indyk agrees that the Palestinians are not yet prepared to cut a peace deal with Israel -- but his conclusion is that they need considerable American help. Recent events show that no solution is possible without deep American involvement, said Indyk, who proposes an American trusteeship in Palestinian areas.
In a New York Times Op-Ed piece in late August, Indyk explained what he has in mind: "With United Nations backing, the United States should establish a trusteeship for Palestine, relieving Arafat of all his powers and providing an American-led force to fight terrorists alongside the Palestinian security services. The United States would have to supervise Palestinian reformers in their efforts to build accountable institutions."
"[If President] Bush really wants to help create a democratic Palestinian state," Indyk wrote, "it should be clear by now that the road map alone won't get him there.''
As for the Palestinians, the new situation has led to the first real challenge to Abbas' position as prime minister, as some suggest replacing him with the speaker of the Palestinian Parliament, Ahmad Karia.
Karia is considered closer and more amenable to Arafat, and his challenge is part of a renewed power struggle between Arafat and Abbas that included Abbas' recent attempt to place all security forces under his overall command, which Arafat foiled.
The outcome of this struggle could determine whether Israelis and Palestinians are heading for a new cycle of bloodshed or whether this beleaguered peace process can still be salvaged.