The problem with the plan is, Jordan and the OT are seperate entities. Jordanian territory is not being disputed, Gaza and the West Bank are. Saying that the Palestinians should give up the OT to Israel in return for which they will recieve Jordanian citizenship is absurd. Why not Italian citizenship, or Japanese? Jordan is already recognized as a full, legal country, so Israel is not really making any concessions here. They would simply recognize Jordan as "Palestine", and in return would get all of the West Bank and Gaza Strip.
Furthermore, I don't think Jordan would really be willing to do that. Neither would the Palestinians. If land, and land, was as good as any other land, there wouldn't be a conflict in the first place. Palestinians want that specific bit of land, as does Israel. And therein lies the problem.
Now, while I do agree with you that the PA is corrupt and ineffective, they're the closest thing the Palestinians have to a government. Jordan doesn't care about them, neither does Egypt or Lebanon. So, they need someone to speak for them, and until they come up with something better, thats the PA.
Regarding the disarmament of Hamas & Co (and organization which I think I should point out Israel created), well, they both exist to defend against an invasion from the other. In theory this is true, but in practice, both have attacked targets within the other's territory. So far as Palestine exists as a seperate entity, apart from any neighboring Arab country, Hamas is their military force. However, I don't think you can expect Palestinians to give up their army (its as close as they have to an army) without any was to insure that the IDF won't attack.
Just like the Etzel, Irgun and Lehi members (terrorists, they even admitted it themselves) were made part of the Israeli army, so Hamas, Islamic Jihad and all of those ought to be made into an official army.
its late (or rather, its early) so I'll continue this tommorow.