There is a significant quote Zahhar mentions here:
Hamas was ready to recognize a Palestinian state "on any part of Palestine," for the first time publicly steering away from prior Hamas demands that the modern Palestinian state must be established "from the [Jordan] river to the [Mediterranean] sea."This is definitely a positive step. It is not the best possible scenario for Israel, but just as many party officials in the right-winged Likud party don't recognize Palestinian statehood, Hamas will also have to deal with pressures from their own people to end the current stalemate and find a lasting solution.
Mutual recognition is most likely going to be the highest priority that will need to be sorted out when negotiations resume. The whole concept of making peace is to deal with an organisation that is not a friend or ally, and making strong compromises which both parties have to work on.
Shimon Peres himself, owner of a Nobel Peace Prize, had the following to say:
"Even when I began negotiation with Arafat, they said: 'There's no chance'... I think the same thing about Hamas. The name does not interest me, what matters is the content. Anything can happen, because Hamas has problems too, and it's not so strong... If they [Hamas and Fatah] want to unite, let them unite... The two camps are trying to unite. It is not our business, we don't want to intervene in their decision to unite. What is our business is that the West Bank will not become a Gaza, we would like Gaza to become a West Bank"
The president said it would be better for Israel to focus its energy on building upwards, rather than expanding into Palestinian neighborhoods of East Jerusalem, which the Palestinians want for the capital of their future state. "You can sometimes house 10,000 people in one tower," he said. "Today the whole world is building vertically."[http://www.maannews.net/eng/ViewDetails.aspx?ID=386772]
He makes a very critical point here to the Israeli government, and that ultimately settlements should be halted. That is why the Palestinians stopped negotiating in the first place; that is why Hamas refuse to accept Israel's current legitimacy which can't even uphold its own Balfour Declaration that states that “nothing shall be done which may prejudice the civil and religious rights of existing non-Jewish communities in Palestine”. Defying this Declaration is defying their legitimacy.
Current settlement construction implies that Likud are not willing to recognise Palestine. They have just made an announcement on 19th May to build up to 1,500 settlement units in the East Jerusalem settlements of Har Homa and Pisgat Ze'ev.
Therefore, they, like Hamas, need to start reconsidering the complete perspective of land sharing and ultimate peace in the region.