In his op-ed in the New York Times, President Mahmoud Abbas of the Palestinian Authority calls upon the United Nations to unilaterally recognize the State of Palestine. What struck me was how central the Palestinian refugees and the right of return were to his argument. He starts the article with his own story of expulsion from Safed, and calls the right of return a "most basic of human rights". He also says that a core issue the new state will negotiate with Israel would be "a just solution for Palestinian refugees based on Resolution 194". In other words, their return.
I do not expect Abbas to drop the right of return before there is an agreement in place. However, Israel will never be able to agree to a mass repatriation of Palestinians into its own territory. This is the main reason why Israel and its allies must not allow the establishment of a Palestinian State, or a UN recognition thereof, without a signed final agreement between Israel and the Palestinians. Recognition of a state can only come in a treaty where Palestinians will simultaneously recognize that mass return into Israel cannot be implemented and where an alternative solution is reached.
If the State of Palestine is already recognized by the world community, Palestinians will have less incentive to reach a compromise, even if they are still under Israeli military control. They will bet that now that IDF presence will become an illegal occupation of a whole foreign nation (as opposed to the situation now, where settlements are illegal, but the occupation itself is not) other countries will be more willing to do the Palestinians' work for them and force Israel to give in to all or most of their demands.