Condi Rice is doing her thing, supposedly bringing peace the Middle East, but I don't believe it. She's not a terrible Secretary of State, but she is not a good one either. She parades around and says the right things, but she doesn't back them up. She doesn't fight for anything. Christopher Hill got the North Korean nuclear agreement. She did support him, which is more than Colin Powell did on the issue. She was probably able to support him only because she got rid of John Bolton at State, and Don Rumsfeld and his allies were gone from Defense. Nick Burns negotiated the Indian nuclear deal, but that was much less successful than the North Korean one. The Indian deal is more likely to undermine US security than to improve it, because it undermines the whole nuclear non-proliferation regime by rewarding one of the holdouts of the regime.
While her subordinates have been out doing things, Condi has been giving interviews and making appearances around the world. But she is not going to make any tough decisions. Any progress in the Middle East will require getting Israel to make some sacrifices, and she won't do that because she and Bush won't, or don't want to, stand up to the Israel lobby, AIPAC and company. Thus, her initiative is doomed from the start.
The idea of shoring up Abbas and Fatah is unlikely to lead anywhere. Fatah meant something when Arafat headed it. The Israelis assassinated Arafat, and I think they will live to regret it. The Israelis may not have assassinated Arafat by actually killing him, although they may have. The reasons for his death given by the French hospital where he was treated were never very clear; he could have died from some virus or poison wafted into his ramshackle headquarters by Israel. Or he may have died simply because of the squalid conditions that Israel forced him to live in. In any case, he was a leader of the Palestinians who could actually follow through on promises he made. Abbas does not have they power. He is a puppet of Israel and the US and is perceived as such by the Palestinians and other Arab and Muslim states. The US money and weapons given to Fatah may help him stay in power, but it won't help him bring peace to the region. It would take a leader with more power than Abbas to do that.