No, Israel has never seriously been open to palestinian self-determination. Netanyahu brags about it, because he knows that it has been the mainstream position among israeli politicians so he has to project an image of being especially valuable in that regard.

It's not hiding when you are on your own territory. It's not a shield if your enemy kills non-combatants with impunity. It's also very hard to discern "terrorists" from resistance fighters when you're an occupier operating in occupied territory, which Israel doesn't even try to do.