Thomas Lipscomb has an interesting article on why Sharon’s incursion have left Arafat as impotent as Bob Dole in a Viagra shortage. He basically argues that the point of the incursion into the West Bank was to destabilize the caches of arms that the PA had been carefully placing for months. It also allowed them to gather intelligence, round up militants, and generally make life a lot harder for the terrorists.
As for the release of Arafat, Lipscomb argues that it was better than killing him and making him a martyr, or exiling him, where he could have easier access to media. Instead, they’ve let him go as a man whose forces have been demolished, and who has nothing but more pointless "martyrdom operations" to keep his people interested. While Sharon and Bush went back and forth over a pullout, Israel had all the time in the world to mop up.
An interesting theory, perhaps, but only half accurate, by my account. I agree that Defensive Shield left the Palestinians scattered and unable to pose much of a threat from the West Bank. As for the US, I think Bush was just bowing to pressure in hopes a political solution would emerge. Either way, the real dope in this whole sad affair is Arafat, who should seriously be thinking of a change in career very soon.